Crypto News – Japan’s Reluctance on Crypto ETFs: What You Need to Know

Crypto News- Why Japan Is Hesitant About Cryptocurrency ETFs

Crypto News– Japan’s regulators remain hesitant to approve cryptocurrency-based exchange-traded funds (ETFs), even as global markets embrace the concept of spot crypto ETFs. Despite increasing pressure from domestic advocacy groups and collaborative efforts to launch digital asset products, Japan’s tax and regulatory framework continues to hinder broader adoption.

Japan’s Cautious Stance on Crypto ETFs

Mario Nawfal, entrepreneur and host of The Roundtable Show on X, described Japan’s current attitude toward crypto ETFs as being still in HODL mode. While the U.S. and Hong Kong have already approved spot Bitcoin (BTC) and Ether (ETH) ETFs, Japan’s regulatory bodies, including the Ministry of Finance and the Financial Services Agency (FSA), remain cautious about the volatility and risks associated with crypto ETF products.

The global market has shown a shift toward integrating cryptocurrencies into traditional finance (TradFi). On October 22, for example, investors poured $329 million into BlackRock’s iShares Bitcoin Trust, reflecting growing institutional and retail interest in new crypto ETF products.

In January, the U.S. Securities and Exchange Commission (SEC) granted approval for spot Bitcoin ETFs, followed by Ether ETFs in July. Meanwhile, Hong Kong authorities approved both in April, highlighting a growing willingness among global regulators to incorporate cryptocurrencies into mainstream finance.

Tax and Regulatory Hurdles in Japan

A key obstacle for cryptocurrency ETFs in Japan is the country’s tax policy. Profits from general crypto investments are classified as miscellaneous income, leading to tax rates that can reach up to 55%. In contrast, traditional ETFs enjoy a lower capital gains tax rate of around 20%. This disparity has become a major concern for investors and advocates alike.

On October 20, Yuichiro Tamaki, leader of Japan’s Democratic Party for the People, proposed a platform where crypto assets would be taxed separately at 20%. In a post on X, Tamaki argued there should be no tax when exchanging crypto assets with other crypto assets and emphasized the party’s ambition to position Japan as a leading nation in Web3. However, his party holds relatively few seats in Japan’s parliament, limiting the immediate impact of this proposal.

Continued Investment in Crypto Despite Regulatory Challenges

Despite ongoing regulatory and tax concerns, Japanese firms are actively accumulating cryptocurrency assets. For instance, the investment company Metaplanet purchased an additional 108.78 BTC, valued at approximately $6.92 million, on October 7. This acquisition brought the Tokyo-listed firm’s total holdings to nearly 640 BTC.

Dubbed Asia’s MicroStrategy, Metaplanet has been aggressively acquiring BTC, with its latest disclosures indicating it holds 639.5 BTC worth around $40.5 million. This trend showcases a bullish sentiment for Bitcoin among Japanese firms, even as regulatory frameworks continue to evolve slowly.

In summary, while Japan remains cautious about embracing cryptocurrency ETFs, both the global market and local firms are actively pushing for broader acceptance of digital assets. As the landscape continues to change, the pressure on Japanese regulators may eventually lead to more favorable conditions for cryptocurrency investment and innovation.