Japan’s regulatory and tax framework is slowing the adoption of cryptocurrency-based exchange-traded funds (ETFs). While global markets like the U.S. and Hong Kong have approved Bitcoin and Ether ETFs, Japan’s Ministry of Finance and Financial Services Agency (FSA) remain cautious. Concerns over market volatility and regulatory risks prevent Japan from following suit.
Japan’s tax policies also present a significant barrier. Crypto profits are taxed as miscellaneous income at rates up to 55%, while traditional ETFs enjoy a lower 20% capital gains tax. This disparity has prompted calls for tax reforms, with political figures like Yuichiro Tamaki advocating for a reduced 20% crypto tax rate.
Despite these hurdles, Japan’s crypto market remains active. Tokyo-based investment firm Metaplanet recently increased its Bitcoin holdings to nearly 640 BTC, highlighting ongoing interest in digital assets. However, without regulatory and tax reforms, Japan risks falling behind in the global crypto ETF race.