Japanese Bitcoin ETF Delayed Until 2027, KPMG Exec Says

A Japanese Bitcoin ETF is expected to debut in 2027, according to KPMG Japan executive Kenji Hoki. The ETF request would likely materialize in early 2026, with the law coming into effect in the spring of 2027. However, legal obstacles remain, including the terms of the Investment Trust Act and supervisory guidelines. Experts lament that Tokyo is behind the US, Hong Kong, and Singapore in the crypto market. One solution could be allowing Japanese investors access to overseas Bitcoin ETFs.

Japan is advancing sweeping reforms to its cryptocurrency framework, aiming to align digital assets with traditional financial instruments and stimulate broader adoption. The Financial Services Agency (FSA) has announced plans to reclassify crypto gains from "miscellaneous income" to a flat 20% tax bracket, matching the rate for equities and bonds starting in fiscal 2026. This move is intended to reduce the tax burden on crypto investors, who currently face effective rates that can exceed 55%. Under the new proposal, losses will also be eligible for carry-forward deductions over three years, a provision already available for stock investors [1].

The FSA’s reforms also include amending securities laws to formally recognize cryptocurrencies as financial products. This change would place digital assets under the Financial Instruments and Exchange Act, enabling the FSA to apply oversight such as insider-trading rules, disclosure obligations, and investor protection standards. Analysts suggest that this reclassification is a critical step toward enabling the launch of regulated spot Bitcoin ETFs in Japan, products that are increasingly popular globally but remain unavailable in the country [2].

To support these changes, the FSA plans to establish a dedicated Digital Finance Bureau within its structure. This bureau will oversee the integration of crypto with traditional finance while maintaining consumer protections. The move reflects Japan’s broader strategy of promoting digital finance innovation while ensuring market stability and regulatory clarity [3].

The FSA’s reforms are part of Japan’s broader initiative to position itself as a leading "asset management nation" in the digital age. In addition to the tax and regulatory changes, the government is expanding investment opportunities for younger demographics by adjusting the Nippon Individual Savings Account (NISA) program. Plans include lowering the minimum age for NISA participation to 18 and broadening the range of eligible products, including crypto-related assets. These measures aim to foster a new generation of investors and encourage more systematic engagement with digital assets [4].

Retail participation in crypto remains limited in Japan, with 88% of residents reportedly never having owned Bitcoin. High taxes and regulatory uncertainty have been key barriers to adoption. The FSA hopes that a simplified tax system, combined with regulated investment products like ETFs, will finally encourage more individuals to participate in the market. Institutional interest is also growing, with over half of investors planning to allocate capital to crypto within the next three years [5].

Japan’s approach to crypto regulation has evolved significantly in recent years. Prior incidents, such as the collapse of Mt. Gox, underscored the need for stronger oversight. The FSA has since implemented stricter regulations, restoring confidence in the sector and creating a more stable environment for innovation. These reforms aim to build on that progress by integrating digital assets into the mainstream financial ecosystem while maintaining transparency and investor protections [6].

References:
[1] Japan Prepares Wweeping Crypto Reforms: Tax Cuts and ... (https://cryptodnes.bg/en/japan-prepares-wweeping-crypto-reforms-tax-cuts-and-etf-approval-on-the-horizon/)
[2] The Financial Services Agency of Japan plans to reform ... (https://www.chaincatcher.com/en/article/2199815)
[3] Japan's FSA Pushes for Safer Crypto With Flat Tax and ETFs (https://www.bitget.com/news/detail/12560604926884)
[4] Japan Readies Significant Cryptocurrency Reforms ... (https://intellectia.ai/news/crypto/japan-prepares-major-crypto-reforms-with-tax-cuts-and-etf-access-on-the-horizon)
[5] Japan Eyes 20% Crypto Tax, Bitcoin ETF, and Stablecoins ... (https://coinpedia.org/news/japan-eyes-20-crypto-tax-bitcoin-etf-and-stablecoins-by-2026-full-details/)
[6] Crypto Brief - Lowenstein Crypto Newsletter - August 21, ... (https://www.jdsupra.com/legalnews/crypto-brief-lowenstein-crypto-2024285/)