Japanese Authorities Explore Crypto ETFs After Refusing Futures

Less than a month ago, financial watchdog at Japan refused plans for cryptocurrency futures. Now, reportedly, Japan’s financial regulator is looking forward to allowing Bitcoin (BTC) exchange-traded funds (ETF).

A person familiar with the matter revealed that Japan’s financial watchdog has abandoned plans to allow listed derivatives based on cryptocurrencies but may indicate the green signal to exchange-traded funds that track the asset class. The Financial Services Agency (FSA) is testing interest in an ETF with a perspective to give the instrument the approval to trade on domestic markets.

The step to approve ETFs is the exact opposite of what the US did. In the US, regulators are reluctant to take risks regarding ETFs but permit physical Bitcoin futures trading, which FSA has rejected. The financial watchdog at Japan explained the decision of rejecting futures noting that introducing such products would only have stoked speculation and little else. Allowing cryptocurrency futures would make Japan join countries like the United States which already have listed futures which track bitcoin.

Talking about US’ opinion about ETFs, securities lawyer Jake Chervinsky firmly expressed that lawmakers were not likely to change the view anytime soon. It is also speculated that the current government shutdown in Washington could see the Securities and Exchange Commission (SEC) give automatic approval to ETF. Chervinsky noted, “It’s true that a proposed rule change is auto-approved if the SEC doesn’t make a decision by the deadline, but in reality, it would never happen.” He added, “The SEC has enough staff to put out a decision, even if it’s a one-pager saying ‘denied for reasons to be explained later.”

Further, the Japanese Financial Services Agency is aiming to give more powers to regulatory bodies appointed by sector bodies and members to oversee the crypto space. Japan’s Financial Services Agency also working on to limit the leverage which can be offered by exchanges and brokers. FSA is also looking forward to putting a majority of initial coin offerings (ICO) under the country’s securities law. All of these and more proposals by FSA are likely to be integrated into a bill. The bill will be submitted by the country’s ruling party before the current parliamentary session ends in two months. These proposals are expected to become law by end of the next year.