Japan’s strict crypto regulations hold back ETF adoption

Japan’s financial regulators remain cautious about approving spot crypto exchange-traded funds (ETFs), even as other markets like the US and Hong Kong move forward with similar products. Oki Shiozawa, investment director at Sumitomo Mitsui Trust Asset Management, explained that Japan’s Financial Services Agency (FSA) is conservative and not yet ready to allow such ETFs, despite global advancements.

While Japan aims to position itself as a crypto-friendly hub, strict regulations and high tax rates have limited the growth of digital assets. Crypto gains in Japan are taxed as high as 55%, compared to the 20% tax rate for traditional assets like ETFs. Keisuke Kimura, from the Japan Cryptoasset Business Association, noted that past scandals, like Mt. Gox, have made both regulators and the public wary of crypto investments.

Despite the challenges, companies like Franklin Templeton and SBI Holdings are preparing for potential regulatory shifts, while others, like Nomura, have already launched crypto-related products for institutional investors. As global markets embrace crypto ETFs, Japan faces increasing pressure to adapt.