According to Bloomberg, Japanese financial institutions such as Mitsubishi UFJ Trust and Banking Corporation and Nomura Securities have organized a proposal suggesting that if they consider launching a cryptocurrency ETF, they should focus on major tokens such as Bitcoin and Ethereum. Japanese investors hope that the approval of a cryptocurrency ETF will bring significant tax benefits.
(Background:
Why is the approval of a Bitcoin ETF considered a major victory in the market?
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Priority support for Bitcoin and Ethereum ETFs
Japan takes a cautious stance on cryptocurrency ETFs
Reforms drive the approval of cryptocurrency ETFs
In January and July of this year, the United States successively launched Bitcoin and Ethereum spot ETFs, which caused discussions in various countries on whether domestic investors should be allowed to participate in such products, and even directly launch their own cryptocurrency ETFs. Even the more conservative Japan is considering whether to follow the footsteps of overseas by issuing cryptocurrency ETFs.
According to a report by Bloomberg on the 25th, Japanese institutions interested in issuing cryptocurrency ETFs have formed an organization and proposed in the latest proposal that if they consider launching a cryptocurrency ETF, they should focus on major tokens such as Bitcoin and Ethereum. The organization believes:
The members of this organization include major trust banks, cryptocurrency exchanges, and securities brokerage companies in Japan. Trust banks include “Mitsubishi UFJ Trust and Banking Corporation” and “Sumitomo Mitsui Trust Bank,” cryptocurrency exchange members include “bitFlyer,” and securities brokerage company members include “Nomura Securities” and “SBI Securities.” The organization specifically emphasizes that the opinions in the proposal represent a consensus among the members and do not represent the individual positions of each member.
In addition, the proposal also calls for the Japanese authorities to reconsider the current cryptocurrency tax system. This is the main reason why Japanese investors are looking forward to the approval of cryptocurrency ETFs. In Japan, the profits from general cryptocurrency investments are regarded as miscellaneous income, and the highest tax rate is 55%. However, ETFs that can be traded on the securities market are considered capital gains, with a tax rate of about 20%.
Compared with countries such as the United States, Hong Kong, and Australia that have successively approved cryptocurrency ETFs this year, Japan appears to be more cautious and conservative in promoting such products. According to the Financial Times, although Japan claims to be a digital asset-friendly country, it is still reluctant to relax tax and regulatory restrictions in policies to avoid risks.
In response, Oki Shiozawa, the Investment Director of Sumitomo Mitsui Trust Bank, stated that the Japanese Ministry of Finance generally holds a skeptical attitude towards cryptocurrencies. He admitted that he couldn’t think of any way to successfully persuade the authorities, but he also added:
Keisuke Kimura, Vice Chairman of the Japan Cryptocurrency Business Association, believes that in order to launch a cryptocurrency ETF, Japanese regulatory agencies need to make various reforms, including relaxing regulatory restrictions. He said that the key to promoting these changes lies in the widespread recognition of cryptocurrency assets by society, and it is necessary to believe that they can bring positive benefits to the wealth of Japanese citizens.
However, past cryptocurrency scandals, such as the hacking of Mt. Gox and DMM resulting in the loss of hundreds of millions of dollars in Bitcoin, have made it more complicated to promote such reforms. Kimura pointed out:
In conclusion, Japan may still need some time to relax regulatory restrictions and reduce high tax rates before cryptocurrency ETFs are approved.
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