Japan Group Backs Prioritizing Bitcoin, Ether for Crypto ETFs

Japanese financial regulators are examining crypto exchange-traded funds (ETFs) for possible approvals following the U.S. regulator's greenlight to spot Bitcoin and Ethereum ETFs.

A group of Japanese companies has suggested that local regulators in the country should follow the U.S. by focusing on the major crypto assets, Bitcoin and Ethereum, for ETF approval before considering other digital assets.

Japanese financial regulators are looking into crypto exchange-traded funds (ETFs) for possible approvals following the U.S. regulator’s approval of spot Bitcoin and Ethereum ETFs.

According to the group, Bitcoin and Ethereum have historically stable track records and large market values. These attributes make both assets suitable for investor exposure in the medium and long-term duration.

In the statement issued on Friday, the group also asked for a review of tax systems, including the division of tax on income earned.

The Japanese group has major companies from various industries, including Mitsubishi UFJ Trust and Banking Corp. and Sumitomo Mitsui Trust Bank. The group also has crypto exchanges such as bitFlyer Inc. and brokerage entities like Nomura Securities Co. and SBI Securities Co.

In the statement, the group emphasized that its ETF perspective is a consensus rather than individual members’ proposals.

A Financial Service Agency (FSA) official said in September that the agency will review its approach to regulations to account for the crypto industry. Once executed, the ruling could pave the way for institutional investments in the crypto sector accompanied by tax-reducing revisions.

The official cautioned that the review had no foregone conclusions and could take some time to complete. FSA chief Hideki Ito also expressed his hesitance on crypto ETFs during an interview in August. Japan’s current tax policies consider crypto returns as miscellaneous income and levy digital asset gains at 55%.

While the Japanese regulators remain hesitant to expedite crypto regulations, other markets such as Hong Kong and China are steps ahead, having approved crypto-linked spot exchange-traded funds.

The U.S. and China’s approval of crypto ETFs demonstrates an evolving financial landscape across the world that integrates digital assets into traditional finance.

The U.S. financial watchdog (SEC) gave Bitcoin and Ethereum ETFs the thumbs up in January and July, respectively. The approvals came after rejecting crypto ETF applications for the last decade.

Hong Kong regulators approved both ETFs in April. The approvals brought a glimmer of hope to the crypto industry that has long suffered in the jaws of regulators worldwide.

While discussions about ETFs continue in Japan, U.S. spot Bitcoin ETFs have witnessed a cumulative flow of $21.53 billion since they got listed early this year, according to data from Sosovalue. On October 24th, the Bitcoin ETFs registered a daily net flow of $188.11 million. U.S. spot Bitcoin ETFs have total net assets under management worth $66.09 billion.

On the other hand, U.S.-approved spot Ethereum ETFs saw inflows worth $2.30 million on October 24th and have more than $7 billion in assets under management at the time of this publication.