Anika Begay
According to a recent Bloomberg report relationshipJapan’s top financial regulator is slowing approval of cryptocurrency exchange-traded funds (ETFs), taking a more conservative stance than regulators in other countries.
Crypto ETF Expansion Meets Headwinds in Japan
Hideki Ito, commissioner of Japan’s Financial Services Agency (FSA), has stressed the need for “cautious consideration” when greenlighting crypto-linked ETFs in the country. Ito expressed concerns that cryptocurrencies “do not necessarily contribute to the wealth creation of the Japanese people in a stable and long-term manner.”
Hideki Ito’s comments come as global regulators have softened their stance on ETFs that invest directly in cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH).
For example, the U.S. Securities and Exchange Commission approved the first spot-bitcoin ETFs earlier this year, after a lengthy legal battle with asset manager Grayscale.
Similar crypto ETFs have recently been launched in markets such as Hong Kong, Australia and the UK following the successful trading of these products in the United States. These exchange-traded funds attracted significant net inflows of $19.2 billion.
However, Japan appears intent on taking a more measured approach. Ito, a career bureaucrat who took over as FSA commissioner in July, said the agency wants to maintain a “pro-technology stance” but has reservations about encouraging a broad retail investment in cryptocurrencies.
Scars of past trade failures
Bloomberg notes that the FSA’s caution is rooted in Japan’s checkered history with cryptocurrency exchanges and hacks. Customers of the now-defunct Mt. Gox exchange are still working to recover tokens lost in a major breach more than a decade ago.
Furthermore, in June this year, the DMM Bitcoin exchange, one of the largest in the Asian country, lost $305 million in what security firm Chainalysis called the seventh-largest digital asset theft on record.
In this context, the FSA seems intent on proceeding slowly and cautiously when it comes to approving cryptocurrency-related ETFs that would open the door to a broader market. main investmentIto acknowledged that the regulator would not rule out the possibility entirely, but insisted that further consideration was needed.
At the time of writing, the largest cryptocurrency on the market, Bitcoin, has managed to regain the $58,330 level after hitting a 7-month low on Monday, amid global economic uncertainty.
This comes as US BTC-linked ETFs have significantly supported the price, with fresh inflows recorded in Wednesday’s trading session. Second After a few days of “mild outflows,” these ETFs saw net inflows of $45 million on Aug. 7, according to Bloomberg ETF expert Eric Balchunas.
However, the most important aspect regarding the inflows is that these index funds, with the exception of Grayscale’s Bitcoin Trust (GBTC), have not seen any outflows, which demonstrates the institutions’ confidence in the cryptocurrency’s long-term prospects.
Featured image from DALL-E, chart from TradingView.com
