As a seasoned crypto investor with roots deeply embedded in the dynamic landscape of Asia, I find myself both encouraged and perplexed by Japan’s approach towards spot crypto ETFs. On one hand, it’s heartening to see progressive moves from players like Franklin Templeton and Nomura, signaling a potential shift in regulatory stance. On the other, the cautiousness exhibited by authorities seems rooted in past experiences, a testament to the enduring impact of incidents like Mt. Gox and DMM.
Despite a worldwide trend leaning towards the approval of exchange-traded funds (ETFs) based on cryptocurrencies, regulators in Japan maintain a conservative stance. This is as reported by Sumitomo Mitsui Trust Asset Management.
In simpler terms, Japanese regulatory bodies tend to approach bitcoin trading funds with caution, which is different from the more open strategies used in countries such as the United States and Hong Kong.
During an interview with the Financial Times, Oki Shiozawa, who serves as an investment director at Sumitomo Mitsui Trust Asset Management – one of Asia’s biggest asset managers with over $620 billion in managed assets – pointed out that Japanese regulators are not yet prepared to endorse crypto Exchange-Traded Funds (ETFs) at this time.
At present, I’m struggling to devise a strategy that could convince the regulatory body. Yet, I want to clarify that I’m not implying that cryptocurrency-based ETFs are unattainable. However, it’s important to note that Japan’s Financial Services Agency, which has the authority to approve financial products, tends to lean toward conservatism.
Oki Shiozawa
In contrast to its aim of becoming a major hub for crypto asset management, Japan’s high taxes and strict regulations might be hindering wider acceptance of cryptocurrencies. Unlike profits from ETF investments which are taxed at 20%, profits from crypto investments in Japan are categorized as miscellaneous income, with a potential tax rate of up to 55%.
Keisuke Kimura, vice-president of the Japan Cryptoasset Business Association, pointed out that the restrictions in Japan primarily stem from regulatory issues and the lingering effect of past scandals such as Mt. Gox and DMM, which have left a strong impression on the public due to their impact on investors’ losses, making it difficult for cryptocurrencies to gain widespread acceptance.
In Japan, the primary reason for the present circumstances lies in regulatory limitations. At this time, our regulations do not allow for crypto assets to be integrated into investment trusts or Exchange-Traded Funds (ETFs).
Keisuke Kimura
In the face of these hurdles, certain companies are readying themselves for possible changes in regulation. For instance, Franklin Templeton and SBI Holdings joined forces in July to create innovative offerings, such as crypto Exchange-Traded Funds (ETFs). Similarly, Japanese banking titan Nomura recently introduced a Bitcoin investment fund tailored for institutional investors.
In January, the U.S. granted its initial Bitcoin ETFs approval, with Ethereum ETFs following suit in July. Similar progress has been seen in markets within the Asia-Pacific region, including Hong Kong and Australia. This development has led to demands for Japan to take a similar step forward.
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2024-10-23 10:04