Japan’s Financial Services Agency May Approve Crypto ETFs After Ignoring Futures Contracts

News, Regulation | January 8, 2019 By:

Japan’s Financial Services Agency (FSA) is considering approving cryptocurrency-based exchange-traded funds (ETF).

Citing a person familiar with the matter, Bloomberg reported that the FSA abandoned its plans to allow listed derivatives based on cryptocurrencies, but is open to approving crypto ETFs.

“The Financial Services Agency is currently gauging industry interest in ETFs tracking digital currencies,” the source said. The regulator last month decided against pursuing revisions to the nation’s securities law which would have allowed crypto futures and options to be listed on major financial exchanges after concluding that such products would achieve little besides stoke speculation.”

According to the report, the Liberal Democratic Party will submit draft legislation by March, which could include such a move through amendments to existing financial rules.

“The conclusions will likely serve as a backbone for a bill the Liberal Democratic Party will probably submit during the current Diet session that ends in March, with the eventual goal of becoming law as early as 2020,” the person said. “Besides aiming to amend securities legislation through the Financial Instruments and Exchange Act, some of the FSA’s recommendations will likely result in changes to the Payment Services Act.”

Experts believe that ETFs will give crypto products more legitimacy in the eyes of some investors, and will make them more accessible to those who already have a brokerage account. However, global regulators, including the US Securities and Exchange Commission (SEC), are still reluctant to allow crypto ETFs due to fears about price manipulation or the security of the underlying crypto assets.