Japan, known as one of the best regulated cryptocurrency destinations, may soon pioneer a highly sought after cryptocurrency investment vehicle, bitcoin ETFs.
According to a Bloomberg report, the Financial Services Agency (FSA) responsible for regulating the cryptocurrency market Japan is considering an approval for cryptocurrency-based exchange-traded funds (ETFs).
Japan’s FSA Rejected Bitcoin Futures Last Year
Bloomberg citing “a person familiar with the matter” said that the FSA was considering the ETF proposal after it abandoned proposal for cryptocurrency futures a month ago. Japan refused to modify its securities laws in other to allow cryptocurrency-based options and futures on major exchanges in the country. After deliberation, The Japanese regulators concluded that approving crypto Futures contracts will do little more than increasing speculation around cryptocurrencies.
How does an Approved Bitcoin ETF in Japan Affect Crypto?
If Japan goes ahead to approve its first cryptocurrency ETF it will be following after Switzerland who pioneered such an exchange-traded product in November of 2018. The Amun Crypto Basket Index ETP approved in Switzerland has attracted about $6 million since its launch. Also, it brings in an average of less than $1 million in daily turnover.
But the Japanese stock market and crypto followership is a lot bigger than the Swiss. A Japan-approved crypto ETF is, therefore, expected to bring in substantially more but nothing close to the impact a U.S.-approved bitcoin ETF will have.
Bitcoin ETF Remains Elusive in the United States
Cryptocurrency analysts have put a lot of hope on bitcoin ETF approved in the US. The belief is that the bitcoin ETF, just like the bitcoin futures will lead the next major surge in crypto prices and bring in much liquidity to the crypto markets.
But so far, this has remained farfetched.
The Securities and Exchange Commission (SEC) has rejected several bitcoin ETF proposals last year, each time dampening the mood in the crypto community. The latest is a delay in the VanEck-SolidX Bitcoin ETF rule change. As reported by Smartereum, the SEC announced that the new date for a decision on the proposal is February 27, 2019. One of the main reasons given for denying the bitcoin ETF in the US is the unregulated nature of bitcoin markets which leads to market manipulations and undue risks to investors.
Japan’s FSA working with Self-Regulatory Group
On the part crypto regulations, Japan through its FSA has modeled a system that involves not only the government guidelines but also voluntary self-regulation by crypto exchanges. Recently five more cryptocurrency operators joined 16 others in the country’s group JVCEA.
JVCEA—Japan Virtual Currency Exchange Association—was formed to restore confidence in the cryptocurrency market after the country was rocked by major hack on Coincheck exchange which cost over $530 million in cryptocurrency. As Smartereum reported, Coincheck was one of the new entrants to the group which have already made regulatory proposals including a trading limit on vulnerable traders to prevent huge investor losses.