Japan Explores Crypto ETFs After Snubbing Futures

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Japan Explores Crypto ETFs After Snubbing Futures

Financial watchdog in Japan has recently approved the exchange-traded funds that keep track of asset class while terminating its plans to allow listed derivatives which are based on cryptocurrencies, explained person familiar with the matter.

This decision to support instruments like Ethereum and Bitcoin Futures opens up another option for investors in one of the largest market for cryptocurrencies who were earlier betting on institutional demand to assist and wipe out lower demand of crypto that emerged last year.

The retail investors of Japan could applaud the possibility of ETF’s tracking digital assets as last year close to $500 million was stolen from Tokyo-based Coincheck Inc.

As of now, the Financial Service Agency is measuring the interest of the industry related to the ETFs tracking digital currencies. According to a person familiar with the matter, the regulator from the agency has earlier decided to follow up the regulations made in regard to nation’s securities law that would allow listing of crypto futures and options on major financial exchanges. The decision to pursue the revision was made after concluding that such products would achieve little besides stoke speculation.

After a months-long internal investigation, the Financial Service Agency submitted its report on why it failed to prevent the Coincheck heist. The agency last month also made an announcement under which it decided to give more oversight power to self-regulatory bodies and drop support for crypto derivatives. The agency, however, also decided to cap leverage that can be offered by crypto brokers and put most initial coin offerings under the scope of its securities law.

The bill that will be submitted by the Liberal Democratic Party will serve as a backbone for the current arguing and set the beginning of the new policies. It is expected that the party will submit the bill during the current Diet session that will end in March 2019, with the aim of becoming law by early 2020. While aiming to amend securities legislation through the Financial Instruments and Exchange Act, it is expected that the new recommendations from FSA’s might also result in slight changes to the Payment Services Act.

The decision from Japan to abolish crypto derivatives has come a year after CME Group Inc and Cboe Global Markets Inc decided to list futures tracking Bitcoin. According to exchange data, the instruments despite attraction have limited demand among institutional investors.