Tokyo, Wednesday, October 30, 2024 – Japan is slow to approve cryptocurrency-based exchange-traded funds (ETFs) despite the global trend, as countries like the US, Australia, and Hong Kong adopt these investment vehicles, reports said last week.
Analysts say that the reluctance stems largely from Japan’s strict tax policies and regulatory barriers, which hinder the growth of crypto ETFs.
In Japan, profits from digital assets are taxed as high as 55%, classified under miscellaneous income, compared to a 20% capital gains tax for traditional ETFs.
This heavy tax burden discourages investors from entering the crypto market, making crypto ETFs less appealing. Additionally, Japan’s regulatory framework currently prohibits crypto assets in investment trusts, including ETFs, further complicating efforts to bring crypto ETFs into the mainstream.
While Japan lags behind, countries like the U.S. are seeing significant demand for crypto ETFs. For example, BlackRock’s iShares Bitcoin Trust recently attracted $329 million in investments, reflecting growing global interest.
Despite Japan’s cautious stance, traditional asset managers like Franklin Templeton are preparing for potential regulatory changes.
Franklin Templeton has partnered with SBI Holdings to develop crypto ETFs, anticipating a more favorable regulatory environment in the future.
Democratic Party for the People has proposed reducing the tax on digital assets to 20%, aligning it with traditional investments.
He believes these reforms are essential for Japan’s competitiveness in the Web3 space. If Tamaki wins the upcoming general election on October 27, his policies could pave the way for crypto ETF approvals and regulatory reforms that foster growth in Japan’s digital asset sector.
