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Japan is preparing to legalize exchange-traded funds (ETFs) by 2028, marking a major shift in Asia’s second-largest economy towards adopting mostly digital currencies, according to… For the Nikkei report.
With a proposed tax cut from 55% to 20% and major asset managers preparing products, Japan is positioning itself as a latecomer, but potentially important country in Asia’s fragmented crypto fund landscape.
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Organizational restructuring in Japan
The Financial Services Authority plans to amend the Investment Fund Law Implementation Order for 2028. Cryptocurrencies will be added to the list of “specified assets” eligible for investment trusts. Following approval from the Tokyo Stock Exchange, investors can now trade cryptocurrency funds through standard brokerage accounts. This structure will mirror the gold and real estate ETFs.
Nomura Asset Management and SBI Global Asset Management are already preparing to develop products ahead of the regulatory changes. Industry estimates suggest Japan’s cryptocurrency fund market could reach 1 trillion yen ($6.7 billion) in traded markets. Forecasts are based on comparisons with the US market. US-listed Bitcoin funds have amassed more than $120 billion in assets.
Reduce rates from 55% to 20%
Perhaps the most important change concerns taxes. The FSA plans to introduce legislation to Parliament in 2026. The bill would reclassify digital currencies under the Financial Instruments and Exchange Act. And this It will reduce the maximum The tax rate on cryptocurrency dividends is only from 55% to 20%, combining cryptocurrency dividends with dividends from stocks and mutual funds.
The current tax burden has been a major drawback for Japanese investors, many of whom have been hesitant to cash in on their cryptocurrencies. The proposed interest rate cut could clear up significant pent-up demand.
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Investor protection framework
Japan’s approach reflects lessons learned from the recent market turmoil. The FSA will require trusted banks that manage ETF holdings to implement strict security protocols, addressing issues raised by the DMM 2024 Bitcoin hack that led to losses for Â¥48.2 billion yen.
Asset managers and securities firms will also need to strengthen risk disclosure and operational safeguards ahead of the 2028 launch.
Asia’s Fragmented Crypto Fund Landscape
In the region, regulatory approaches vary widely.
Stay Hong Kong The only Asian market where spot crypto trading funds are available to investors Individually, launched six Bitcoin and Ether products in April 2024 Solana funds added October 2025. Assets under management reached about $ 500 million – a fraction of the levels of the United States.
The Democratic Party of South Korea is pushing forward its core digital assets project through a dedicated task force. The party aims to finish a draft by the end of the month. However, the timeline remains uncertain ahead of local elections in June, with talks on a spot bitcoin exchange fund – a key campaign promise from President Lee Jae-moong – likely to be postponed.
Taiwan expanded access in February 2025, allowing domestic investment funds to invest in passive offshore cryptocurrency funds. The Federal Security Committee is also advancing a law dedicated to digital currencies, with President Peng Jin-lung indicating the launch of a stablecoin backed by the Taiwanese dollar in mid-2026.
Singapore has not approved cryptocurrency index funds for retail investors, with the Monetary Authority asserting that digital tokens are not suitable for collective investment schemes.
By waiting until 2028, Japan can learn from the experiences of other markets. But with South Korea’s ruling party pushing its own legislation and Hong Kong expanding its product offering, the regional race is far from decided.
