Japan expects slow, strict taxes, regulations to approve crypto ETFs
Japanese regulators are reluctant to approve cryptocurrency-based exchange-traded funds (ETFs), even as global markets accept spot crypto ETFs.
Despite growing calls from domestic advocacy groups and partnerships to launch digital asset products, Japan's tax and regulatory stance continues to hinder adoption.
Mario Naufal, entrepreneur and host of the Roundtable Show X on X, described Japan's approach to crypto ETFs as “still in HODL mode.”
Source: Mario Naufal's Round Table
Related: Japan's Metaplanet Buys $7M in Bitcoin, Brings Holdings to $40.5M
Global market changes
The United States and Hong Kong have approved spot bitcoin (BTC) and ether (ETF) ETFs, reflecting growing interest in incorporating crypto into traditional finance (TradFi).
This shift in institutional and retail investment is evident as investors poured $329 million into BlackRock's iShares Bitcoin Trust on October 22.
The US Securities and Exchange Commission (SEC) gave BTC ETFs the green light in January, followed by Ether ETFs in July, while Hong Kong authorities approved both in April.
Still, Japan's Ministry of Finance and the Financial Services Agency (FSA) should be cautious about the volatility and risks associated with crypto ETF products.
Related: Japanese political party leader promises crypto tax cuts if elected
Tax and regulatory issues
It is a central issue in Japan's tax policy, as profits from general crypto investments are considered miscellaneous income and subject to a tax rate of up to 55%.
The difference is a major concern as the country's traditional ETFs have low capital gains tax rates of around 20%.
On October 20, Democratic Party of Japan leader Yuichiro Tamaki suggested that voters support his party if they think “crypto assets should only be paid at 20%.”
In X's post, Tamaki explained that “there should be no tax when exchanging crypto assets with other crypto assets” and that the party wants to make Japan a “strong country” in Web3. Still, Tamaki's party has few seats in Japan's parliament.
Related: Aptos Labs enters Japan with Hashpalt acquisition
Japan is still worried about Bitcoin.
Japanese companies continue to accumulate crypto assets despite the country's ongoing regulatory and tax concerns.
Japanese investment firm Metaplanet bought an additional 108.78 BTC for $6.92 million in October, bringing the Tokyo-listed firm's total holdings to nearly 640 BTC.
Dubbed “Asia's micro strategy,” Metaplanet has been aggressively acquiring BTC, holding 639.5 BTC worth around $40.5 million as of its latest announcement.
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