The Japan Financial Services Agency (FSA) is considering the approval of cryptocurrency exchange-traded funds (ETF). This comes barely a month after the authority banned the trading of crypto derivatives on Japanese digital asset trading platforms.
As per reports are given to Bloomberg, the FSA, the topmost financial oversight authority in Japan, could soon approve crypto ETFs in the Asian country. This is particularly surprising because the same agency prohibited the trading of digital currency futures and options on local exchange platforms.
Exchange-traded funds are securities that are used to follow the value of invested assets. ETFs are tradable on exchange platforms. There is a widespread belief that the introduction of cryptocurrency ETFs would encourage institutional investors to adopt virtual currencies. It is also believed that the approval of such would result in the soaring of the value of digital assets.
As of now, the Japanese ETF market is a minnow when compared to the American market. This, however, could soon change because of the impending approval of crypto ETFs by the FSA, as well as the rapidly growing crypto space in Japan.
Although nothing is yet to be finalized, it appears that the FSA is seriously contemplating the introduction of crypto ETFs. Regardless, there is still a possibility that the agency could decline the approval of such ETFs.
The SEC might have shown reluctance towards the concept of crypto ETFs, but several countries around the globe are warming up to this idea. In autumn 2018, a crypto exchange-traded product (ETP) was introduced to the Swiss Exchange (SIX) by a company called Amun. The ETP tracks the value of leading virtual currencies such as BTC, ETH, XRP, and LTC. It is adjusted on a monthly basis depending on the performance of the respective cryptocurrencies. Essentially, Amun allows investors to enter the crypto market through one purchase.
Japan is set to become the first country after Switzerland to opens its doors for cryptocurrency ETFs. On the other hand, US-based investors still have a lot of convincing to do before the SEC drops its concerns over the volatility and ease of manipulation of crypto exchange-traded products.