Japan Fumbles Crypto ETF Entry As Regulators Pine For Safety

Regulators claim they are seeking to promote retail investor safety, yet key industry players are raising concerns that the country is falling behind rival jurisdictions.

The Financial Services Agency plans to add digital assets to the list of specified assets for ETFs, which could be listed as early as 2028, according to reports. Nomura, the largest independent securities firm and wealth manager, and SBI Holdings, the biggest online brokerage, are set to lead the creation of the first crypto ETFs.

The digital year zero delay

The products require approvals for listing by the Tokyo Stock Exchange. Earlier on 26 Jan, the venue hosted Finance Minister Satsuki Katayama’s declaration that 2026 was Japan’s "Digital Year Zero".

The designation was meant to signal a strategic shift from viewing crypto as a consumer risk to be contained, to a tool to modernise capital markets and unlock dormant household savings. However, progress has been spotty. Protection for retail investors still features high on the list of regulators’ priorities, including enhanced custody safeguards and disclosure requirements. If 2026 is indeed "Year Zero," then 2028 is starting to look like "Year Too Late."

Tax reforms and the retail surge

Key tax legislation that would reduce the maximum crypto tax rate from as high as 55% to a flat 20% is expected to be effective on 1 Jan 2028. The tax discount could unlock a surge of retail investor funds. While Tokyo appears to want to link the two regulatory shifts, some industry participants are calling for quicker action.

Tomoya Asakura, CEO of SBI Global Asset Management, argued in a post on X that cryptocurrency ETFs will be a powerful catalyst to accelerate the shift from savings to investment. He noted that with Japan's goal of becoming a "nation built on asset management," lifting the ban in 2028 is simply too late.

Tokyo has stated its ambitions to be a "Leading Asset Management Center" by redirecting a significant portion of its households' 2,200tn yen ($14.24tn) in savings into investments. After being one of the earliest markets in Asia-Pacific to roll out the welcome mat for crypto, Japan has fallen behind Hong Kong and Singapore. Earlier this month, the Nasdaq-listed parent of Japanese exchange Coincheck announced it was buying approximately 97% of Canada’s 3iQ from Monex Group Inc. for $111.8mm.

Some in Japan's asset management industry estimate that Japanese crypto ETFs could eventually reach 1tn yen ($6.4bn). Whether there will be any market share left to capture by 2028 remains to be seen.