Japan is methodically preparing to allow cryptocurrency exchange-traded funds (ETFs) by 2028, a move contingent on a coordinated rollout of securities law amendments and tax reforms. The initiative aims to enable Japanese investors to access crypto assets through ordinary securities accounts, significantly improving accessibility for both retail and institutional players. Currently, such ETFs are not available on Japanese securities exchanges or through brokerage firms, forcing investors to navigate the complex process of opening crypto exchange accounts and managing private keys.
The proposed timeline would place Japan's crypto ETF debut roughly four years after similar products launched in the United States and Hong Kong. The U.S. Bitcoin ETF market, which began in January 2024, now manages approximately $130 billion in assets and has seen adoption by U.S. pension funds, universities like Harvard, and sovereign-linked funds.
Motoyuki Azuma, a director at Convano Consulting, highlighted the credibility challenge, stating, "The credibility of holding BTC in our business portfolio sometimes faces scrutiny from certain Japanese investors. ETFs make crypto holdings look more official and more trusted, and easier to explain to investors." A 2024 survey by Nomura's Laser Digital Holdings found that 54% of institutional investors plan to invest in crypto assets within three years.
Regulatory hurdles remain substantial. Any crypto ETF requires approval from the Tokyo Stock Exchange and is contingent on an amendment to the Investment Trust Act to add crypto assets to the list of "specified assets" that investment trusts can hold. Azuma criticized the 2028 timeline as "far too late," suspecting it is designed to give crypto exchanges and the Tokyo Stock Exchange time to update their operational frameworks.
Security concerns are a key driver of regulatory caution, shaped by incidents like the 2024 hack of exchange DMM, which lost 48.2 billion JPY (approx. $306 million USD) in Bitcoin, an attack attributed to North Korean hackers.
A pivotal legal shift is planned for 2026, when Japan's Financial Services Agency (FSA) intends to recognize crypto assets as financial instruments under the Financial Instruments and Exchange Act (FIEA). This framework would pave the way for ETF approvals. Concurrently, a tax reform plan proposes changing the classification of crypto from a "means of payment" taxed as miscellaneous income at rates up to 55%, to a flat 20% tax rate, aligning it with stocks and investment trusts.
Industry projections suggest Japan's crypto ETF market could reach roughly 1 trillion JPY ($6.5 billion) in assets post-approval. Major financial institutions are already preparing, including Nomura Asset Management, SBI Global Asset Management, Daiwa Asset Management, and Mitsubishi UFJ-linked subsidiaries. SBI Holdings is planning the country's first crypto ETF, which will track both Bitcoin and XRP. Its initial product is a mixed investment trust with a 51% allocation to gold ETFs and 49% to Bitcoin ETFs, contingent on regulatory approval.
Despite the momentum, Hajime Ikeda, Senior Managing Director at Nomura Holdings, cautioned that the 2026 legal change won't immediately deliver ETFs to market, emphasizing that unresolved practical issues around custody, security, and liability must be addressed first. He stated that "2026 is shaping up to mark the start of an evolution in Japan's financial services sector."
