Japan’s regulators are showing reluctance in approving cryptocurrency-based exchange-traded funds (ETFs), despite the global market’s increasing acceptance of spot crypto ETFs. This has created obstacles for the adoption of digital asset products, despite growing calls from domestic advocacy groups and partnerships. Mario Nawfal, the host of “The Roundtable Show” on X, described Japan’s stance on crypto ETFs as being “still in HODL mode.”
The approval of spot Bitcoin (BTC) and Ether (ETF) ETFs in the United States and Hong Kong showcases a growing willingness to integrate crypto into traditional finance (TradFi). Institutional and retail investors have shown interest in new crypto ETF products, as demonstrated by the $329 million invested in BlackRock’s iShares Bitcoin Trust on October 22. The US Securities and Exchange Commission (SEC) granted approval for spot BTC ETFs in January, followed by Ether ETFs in July. Hong Kong authorities also approved both in April.
However, Japan’s Ministry of Finance and its Financial Services Agency (FSA) remain cautious due to the volatility and risks associated with crypto ETFs. Tax policy is a major concern in Japan, as profits from general crypto investments are treated as miscellaneous income and subject to a tax rate of up to 55%. In contrast, traditional ETFs in the country are subject to a lower capital gains tax rate of about 20%, leading to concerns about disparity.
Yuichiro Tamaki, the leader of Japan’s Democratic Party for the People, proposed that voters support his party if they believe “crypto assets should be taxed separately at 20%.” Tamaki also suggested that there should be no tax when exchanging crypto assets with other crypto assets. His party aims to make Japan a strong nation in Web3, although it currently holds relatively few seats in Japan’s parliament.
Despite regulatory and taxation concerns, Japanese firms continue to accumulate crypto assets. Metaplanet, a Japanese investment company, recently purchased an additional 108.78 BTC, bringing its total holdings to almost 640 BTC. Often referred to as “Asia’s MicroStrategy,” Metaplanet has been actively acquiring BTC and currently holds around $40.5 million worth of BTC.
In other news, a magazine reported on the Fake Rabby Wallet scam, which is linked to a Dubai crypto CEO and has affected numerous victims.