Japan Moves Toward Crypto ETFs by 2028 With Major Tax Reform and Regulatory Shift

Japan is preparing to legalize cryptocurrency exchange-traded funds (ETFs) by 2028, signaling a major step toward mainstream crypto adoption in Asia’s second-largest economy. According to a Nikkei report, the move will be supported by a sweeping regulatory overhaul and a proposed tax reform that could dramatically change how digital assets are treated in Japan, positioning the country as a late but potentially powerful entrant in the global crypto ETF market.

The Financial Services Agency (FSA) plans to amend the enforcement order of the Investment Trust Act by 2028 to include cryptocurrencies as eligible “specified assets” for investment trusts. Once approved by the Tokyo Stock Exchange, crypto ETFs could be traded through standard brokerage accounts, mirroring the structure of existing gold and real estate ETFs. Major financial players such as Nomura Asset Management and SBI Global Asset Management are already preparing products in anticipation of the regulatory shift. Industry projections estimate Japan’s crypto ETF market could grow to ¥1 trillion (around $6.7 billion) in assets under management, drawing comparisons to the rapid growth of US-listed Bitcoin ETFs, which have surpassed $120 billion in AUM.

A key driver of potential demand is Japan’s proposed crypto tax reform. The FSA plans to submit legislation to the Diet in 2026 that would reclassify cryptocurrencies under the Financial Instruments and Exchange Act. This change would lower the maximum tax rate on crypto gains from as high as 55% to a flat 20%, aligning crypto taxation with stocks and investment trusts. The current tax regime has discouraged many Japanese investors from realizing profits, and the proposed cut could unlock significant pent-up demand.

Investor protection is also central to Japan’s approach. In response to heightened security concerns following the 2024 DMM Bitcoin hack, which resulted in losses of ¥48.2 billion, the FSA will require trust banks handling ETF custody to implement strict security and operational safeguards. Asset managers will also need to strengthen disclosures and risk management frameworks.

Regionally, Japan’s move comes amid a fragmented Asian crypto ETF landscape. Hong Kong currently leads with retail-accessible spot crypto ETFs, while South Korea, Taiwan, and Singapore continue to debate or restrict access. By waiting until 2028, Japan aims to learn from other markets’ experiences, but with regional competition accelerating, the race for crypto ETF leadership in Asia remains wide open.