After shutting down plans to offer listed cryptocurrency derivatives and options, as the products were believed to only fuel speculation, the Japanese Financial Services Agency is now gauging interest in offering cryptocurrency ETFs as per Bloomberg.
Japan has one of the largest markets for cryptocurrencies and if ETF interest is present, amendments to the Financial Instruments & Exchange Act and the Payment Services Act would likely be proposed this March with the final versions being read in, in 2020. The country has been working on developing a framework around cryptocurrency for some time via limiting leverage offered by exchanges and brokers, giving more oversight to self-regulatory bodies and declaring most ICO offerings subject to securities laws. This would be another step in supporting the burgeoning industry.
Currently, the first cryptocurrency ETF is offered on the Swiss exchange (SIX) as the Amun Crypto Basket Index ETP (HODL) and has attracted $6MM, yet the ETP trades less than $1MM daily says Bloomberg. While Japan has a much larger and liquid market for such a product than SIX, it is significantly less than that of the US ETF market holding ~$3.7T. Despite the Japanese ETF market being much smaller than that of the US at just $335MM, the offering of a cryptocurrency ETF would be an important boost for the asset class.