Bitcoin ETFs in Japan: why the FSA’s next move could reshape retail investing

• Nomura Holdings and SBI Holdings are among the financial groups expected to create Japan’s first crypto ETFs.
• Global crypto market capitalisation has tripled in three years to around $3 trillion.
• US-listed spot bitcoin ETFs have grown to roughly $120 billion in total net assets.

Japan could be heading towards its first exchange-traded funds (ETFs) that invest in cryptocurrencies, with listings possible as early as 2028, Nikkei reports.

If the plan moves forward, it could give everyday investors an easier route into bitcoin and other digital tokens, without the added complexity of buying and storing crypto directly.

The development comes at a time when large global institutions are already adding crypto ETFs to their portfolios, while regulators in major markets have started treating digital assets as a more established part of modern investing.

Japan’s Financial Services Agency (FSA) now appears set to test how far crypto exposure can go inside traditional market products, while tightening investor safeguards to match the risks involved.

Crypto ETFs could enter Japan’s regulated market

The FSA plans to add cryptocurrencies to the list of specified assets that ETFs can invest in, according to Nikkei.

This would be a key regulatory step because it would allow fund managers to create products that track crypto prices and trade them through an exchange, much like equity or commodity ETFs.

Stronger investor protection measures are also expected to be proposed alongside the change.

That is likely to be central to how Japan positions crypto ETFs, given the market’s reputation for sharp price swings and the history of losses faced by retail traders during major downturns.

If the rule change is implemented, it would bring crypto closer to Japan’s mainstream investment structure, making it available through products that are more familiar to everyday investors and operate within established oversight.

Nomura and SBI may lead the first wave

Several large financial players are already seen as potential early movers.

Nikkei named Nomura Holdings and SBI Holdings among the groups poised to create Japan’s first crypto ETFs, signalling growing interest from firms that already play a major role in Japan’s financial system.

However, any ETFs built on this framework would still need approval to list on the Tokyo Stock Exchange.

That means Japan’s top exchange would decide whether these funds can trade publicly, opening the door for wider retail participation through ordinary brokerage accounts.

For fund issuers, ETFs could also provide a more scalable way to meet growing demand for crypto exposure, while keeping investors inside more regulated channels than direct crypto trading platforms.

Why ETFs could lower the barrier for retail investors

Crypto has become a significant alternative asset class, but ordinary investors still face practical hurdles when buying it directly.

Bitcoin and other digital assets are traded and stored in crypto wallets protected by private keys, which can be difficult for less experienced investors to manage safely.

This is where ETFs can change the experience.

Instead of learning how wallets work or taking responsibility for storage, investors can buy and sell ETF units through a stock exchange, similar to how they trade shares.

That ease of access is one reason crypto ETFs have become a popular gateway product in other markets.

Regulators elsewhere have already taken this route.

The US and Hong Kong approved their first spot cryptocurrency ETFs in 2024, setting a benchmark that Japan could eventually follow as it builds its own framework.

Institutional adoption is growing, despite volatility

Bitcoin and other cryptocurrencies can be volatile, but the sector has continued to expand.

Global crypto market capitalisation has tripled over the past three years to around $3 trillion.

Institutional investors have also played a bigger role in turning crypto into a more portfolio-friendly asset class.

Pension funds, endowment funds for major universities such as Harvard, and government-affiliated investors have started including bitcoin ETFs in their holdings, adding weight to the idea that crypto exposure is no longer limited to high-risk retail speculation.

The US market offers an example of the scale involved once regulated products become widely available.

The total net assets of US-listed spot bitcoin ETFs now amount to roughly $120 billion.

Some in Japan’s asset management industry estimate that crypto ETFs in the country could eventually reach 1 trillion yen ($6.4 billion).

If Japan moves ahead with listings, that projection suggests a meaningful level of demand could emerge from domestic investors looking for exposure through exchange-traded funds rather than direct ownership.

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