Japan's Financial Services Agency (FSA) is moving to revise exchange-traded fund (ETF) regulations, aiming to add cryptocurrencies to the list of eligible underlying assets. The shift could clear the way for the country's first spot crypto ETFs to list on the Tokyo Stock Exchange as soon as 2028.
According to the Nikkei report, the FSA is weighing amendments that would allow funds tracking assets like Bitcoin to trade through traditional brokerage accounts, bypassing the need for retail investors to manage private keys. Stricter investor protection measures are also under consideration.
Currently, Japanese individuals can only buy crypto through licensed exchanges — a process often seen as complex and risky due to self-custody requirements. ETFs, which behave like stocks, would dramatically lower the barrier to entry.
Nomura and SBI Position for First-Mover Edge
Major financial groups including Nomura Holdings and SBI Holdings are reportedly preparing to launch Japan's first crypto ETFs once regulatory approval is secured. However, any product still needs listing approval from the Tokyo Stock Exchange, underscoring Japan's cautious approach to market entry.
Details on specific products or timelines were not disclosed in the report. What is clear is that both institutions have been building digital asset infrastructure since 2025, and the ETF rule change would remove the final regulatory hurdle for a compliant launch.
Global Demand Divergence Raises Questions for Japan
The performance of spot crypto ETFs varies sharply across markets. U.S. spot Bitcoin ETFs hold a combined $115.88 billion in net assets, reflecting deep institutional and retail appetite. By contrast, Hong Kong's spot Bitcoin ETFs — approved in 2024 — have recorded only about $235.41 million in total net assets, with thin trading volumes.
Some Japanese asset managers project that local crypto ETFs could eventually reach 1 trillion yen ($6.4 billion) in assets under management. But the report notes that it remains unproven whether demand will materialize at that scale, especially in the early years post-approval.
The global crypto market capitalization has grown to roughly $3 trillion over the past three years, and digital assets are increasingly recognized as an alternative asset class. Yet Asia's muted response to spot crypto ETFs so far suggests that regulatory opening is no guarantee of strong inflows. Japan's challenge will be to design investor protections that don't stifle the very participation the ETF framework aims to encourage.