Japanese Financial Giants Push for Bitcoin and Ethereum ETFs

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The Growing Momentum Behind Crypto ETFs in Japan

A coalition of major Japanese financial institutions—including Mitsubishi UFJ Trust Bank, Sumitomo Mitsui, Nomura Securities, and SBI Securities—has jointly called on the Japanese government to approve spot Bitcoin and Ethereum exchange-traded funds (ETFs). This landmark proposal also urges comprehensive reform of the nation's cryptocurrency tax system, particularly advocating for the separation of crypto capital gains from general income taxation.

The coordinated push reflects a significant shift in institutional sentiment toward digital assets. As global markets embrace crypto-based financial products, Japan risks falling behind without regulatory modernization. The institutions argue that Bitcoin and Ethereum, with their large market capitalizations and proven track records, are suitable for long-term asset accumulation strategies among retail and institutional investors alike.

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Rising Investor Interest in Digital Assets

Recent data highlights a dramatic increase in Japanese investor appetite for cryptocurrencies. According to analysis included in the proposal, crypto investment has climbed from 15th place among asset classes in 2021 to 8th in 2024. The percentage of investors allocating funds to digital assets has surged from just 0.8% to 7.3% over the same period.

The most active demographic is investors aged 30 to 40—tech-savvy individuals who are increasingly comfortable with decentralized finance and blockchain technology. This growing engagement underscores the need for regulated, accessible investment vehicles such as ETFs, which offer exposure to crypto markets without the complexities of self-custody or exchange-based trading.

The coalition includes not only traditional financial powerhouses like MUFG and Sumitomo Mitsui Trust but also key players in the crypto ecosystem such as bitFlyer, Japan’s largest licensed cryptocurrency exchange. Their unified stance strengthens the credibility of the proposal and signals a maturing market consensus.

Without domestic ETF options, Japanese investors face limited access to regulated crypto products. Many are forced to seek offshore solutions or rely on unregulated platforms—both of which carry increased risk and compliance challenges.

Why Bitcoin and Ethereum ETFs Matter

Spot Bitcoin ETFs were approved by the U.S. Securities and Exchange Commission (SEC) in January 2024, followed by Ethereum ETFs in July. These milestones marked a turning point in mainstream financial acceptance of digital assets. In contrast, Japan’s current Investment Trusts and Investment Corporations Act prohibits investment trusts from holding crypto assets directly.

Additionally, the Financial Services Agency (FSA) has not authorized crypto-related discretionary委托 trading, further restricting access. As a result, Japanese investors cannot legally purchase spot crypto ETFs within the country—a growing disadvantage compared to markets like the U.S., Canada, and parts of Europe.

The joint proposal emphasizes that high-market-cap assets like Bitcoin and Ethereum should be prioritized for ETF approval due to their liquidity, transparency, and established security models. By starting with these leading cryptocurrencies, regulators can implement safeguards while gradually expanding the framework to include other qualified digital assets.

ETFs offer several advantages: they provide price exposure without custody risks, enable integration into tax-advantaged accounts like NISA (Nippon Individual Savings Account), and enhance investor protection through standardized reporting and oversight.

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Core Keywords

Urgent Need for Cryptocurrency Tax Reform

Beyond product availability, the proposal calls for fundamental changes to Japan’s cryptocurrency tax framework. Currently, crypto capital gains are classified as "miscellaneous income," which means they are taxed at progressive rates ranging from 5% to 45%, plus an additional 10% local inhabitant tax.

For high-net-worth individuals or active traders, this structure can result in effective tax rates exceeding 50%—a stark contrast to the flat 20% total tax rate (15% national + 5% local) applied to stock trading profits.

This disparity discourages long-term holding and innovation within Japan’s fintech sector. It also creates an uneven playing field where traditional equities are favored over emerging digital assets, despite growing evidence of crypto’s role in diversified portfolios.

The proposal advocates for tax separation, treating crypto gains similarly to stock investments with a fixed-rate system. Such reform would align Japan with international best practices and encourage domestic innovation.

Notably, Japan’s Democratic Party for the People (DPP) has recently introduced a draft policy aiming to cap crypto capital gains tax at 20%. While still under discussion, this legislative move complements the financial sector’s call for reform and suggests growing political momentum.

Fair taxation isn’t just about reducing burdens—it’s about creating a level playing field that fosters innovation, attracts talent, and positions Japan as a leader in the digital economy.

Frequently Asked Questions

Q: Why can’t Japanese investors buy Bitcoin ETFs now?
A: Under current regulations, investment trusts are not allowed to hold cryptocurrencies directly. Additionally, the Financial Services Agency hasn’t approved discretionary委托 trading for crypto assets, blocking the launch of domestic ETFs.

Q: How does Japan’s crypto tax compare to other countries?
A: Japan’s progressive tax system for crypto gains—up to 55% including local taxes—is among the highest globally. Most Western nations apply flat or lower progressive rates, often below 30%.

Q: Are there any crypto-friendly policies already in place in Japan?
A: Yes. Japan was one of the first countries to regulate cryptocurrency exchanges under the Payment Services Act. It also offers the NISA account, which allows tax-free investment growth—a potential future vehicle for crypto ETFs if regulations evolve.

Q: What are the benefits of a spot Bitcoin ETF over buying BTC directly?
A: Spot ETFs eliminate custody risks, simplify tax reporting, allow inclusion in retirement or savings accounts, and provide institutional-grade oversight—making them ideal for mainstream adoption.

Q: Which institutions are backing the ETF proposal?
A: The initiative is supported by major players including Mitsubishi UFJ Trust Bank, Sumitomo Mitsui Trust, Nomura Securities, SBI Securities, and bitFlyer—representing both traditional finance and native crypto expertise.

Q: Could this lead to broader digital asset adoption in Japan?
A: Absolutely. Approving Bitcoin and Ethereum ETFs could pave the way for tokenized securities, CBDC integration, and expanded blockchain use across financial services.

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Conclusion: A Strategic Move for Japan’s Financial Future

The joint call by Japan’s leading financial institutions represents more than a product request—it’s a strategic vision for modernizing the nation’s financial infrastructure. By embracing spot Bitcoin and Ethereum ETFs and reforming outdated tax policies, Japan can reclaim its position as a leader in financial innovation.

With investor demand clearly on the rise and global precedents already set, the time for action is now. Regulatory clarity will not only protect consumers but also stimulate domestic fintech growth, attract international capital, and ensure Japanese investors aren’t left behind in the global digital asset revolution.