Japan’s regulators remain hesitant to approve cryptocurrency-based exchange-traded funds (ETFs), even as other major markets embrace spot crypto ETFs.
Despite rising interest from local advocacy groups and new partnerships aiming to launch digital asset products, Japan’s strict tax and regulatory policies continue to slow crypto ETF adoption. Mario Nawfal, entrepreneur and host of “The Roundtable Show” on X, likened Japan’s approach to crypto ETFs to being “still in HODL mode.”
Global Progress in Crypto ETFs
Countries like the United States and Hong Kong have already taken significant steps toward incorporating cryptocurrency into traditional finance. Both nations have approved spot Bitcoin and Ether ETFs, signaling a shift toward greater acceptance of crypto in mainstream markets. For instance, on October 22, investors poured $329 million into BlackRock’s iShares Bitcoin Trust.
The U.S. Securities and Exchange Commission (SEC) approved spot Bitcoin ETFs earlier this year in January, followed by Ether ETFs in July. Hong Kong followed suit in April, approving both Bitcoin and Ether ETFs.
Japan’s Cautious Stance
However, Japan’s Ministry of Finance and Financial Services Agency (FSA) remain cautious, primarily due to concerns over the volatility and risks tied to crypto ETFs. A key issue is the country’s tax policy, which treats profits from crypto investments as miscellaneous income, with tax rates reaching up to 55%.
By comparison, traditional ETFs in Japan are taxed at a lower capital gains rate of around 20%, creating a significant tax gap that remains a point of contention for crypto investors.
On October 20, Yuichiro Tamaki, leader of Japan’s Democratic Party for the People, urged voters to support his party if they believe that crypto assets should be taxed separately at 20%. In a post on X, Tamaki stated there should be “no tax when exchanging crypto assets with other crypto assets” and expressed his vision of making Japan a strong player in the Web3 space. However, his party holds relatively few seats in Japan’s parliament, limiting the immediate impact of these proposals.
Japanese Firms Continue Crypto Accumulation
Despite the country’s regulatory and tax challenges, Japanese firms are still investing heavily in cryptocurrencies. On October 7, Japanese investment company Metaplanet purchased 108.78 BTC worth around $6.92 million, bringing its total holdings to nearly 640 BTC.
Metaplanet, often referred to as “Asia’s MicroStrategy” due to its aggressive Bitcoin acquisitions, now holds around 639.5 BTC valued at approximately $40.5 million. This shows that while Japan may be slow to embrace crypto ETFs, institutional interest in digital assets continues to grow.
