Spot Bitcoin ETFs remain off Japan's agenda, says major Asian asset managers

Japan’s regulators remain cautious on spot crypto ETFs despite a global shift towards approval, according to Sumitomo Mitsui Trust Asset Management.

Japan‘s regulators maintain a cautious stance on spot crypto exchange-traded funds, diverging from the more progressive approaches seen in markets like the U.S. and Hong Kong.

In an interview with the Financial Times, Oki Shiozawa, investment director at Sumitomo Mitsui Trust Asset Management, one of Asia’s largest asset managers with more than $620 billion in assets under management, indicated that Japanese authorities are currently not in a position to approve crypto ETFs.

“I can’t think of any way to successfully persuade those authorities at the moment. I am not saying that crypto-related ETFs are impossible. However, Japan’s Financial Services Agency, which approves financial products, is basically conservative.”

Oki Shiozawa

While Japan has positioned itself as a crypto-friendly nation, aspiring to grow as an asset management hub, high tax rates and strict regulatory constraints are holding back broader adoption. Profits from crypto investments in Japan are classified as miscellaneous income, subject to a tax rate of up to 55%, compared to the 20% tax rate for capital gains from ETFs.

Keisuke Kimura, vice-president of the Japan Cryptoasset Business Association, explained that the limitations in the country are mainly due to “regulatory constraints” and the public’s perceptiveness of crypto as the impact of past scandals like Mt. Gox and DMM, which led to significant losses for investors, are still fresh.

“The current situation in Japan is primarily due to regulatory constraints, as our laws don’t currently permit the inclusion of crypto assets in investment trusts, including ETFs.”

Keisuke Kimura

Despite these challenges, some firms are preparing for potential regulatory shifts. Franklin Templeton and SBI Holdings partnered in July to develop new products, including crypto ETFs. Japanese banking giant Nomura also rolled out Bitcoin adoption fund for institutional investors.

The U.S. approved its first spot Bitcoin ETFs in January, followed by Ethereum ETFs in July. Markets across the Asia-Pacific, such as Hong Kong and Australia, have made similar advances, spurring calls for Japan to adopt a comparable approach.