Japan’s 2028 Crypto ETF Timeline Sparks Backlash as Financial Giants Rush to Design Products

Japan's financial heavyweights aren't waiting for regulators to catch up. With the country's proposed 2028 timeline for crypto ETFs drawing sharp criticism for being overly cautious, major institutions are already building the products they hope will one day trade.

The Regulatory Roadblock

The Financial Services Agency's (FSA) tentative 2028 target has become a lightning rod. Critics call it a strategic misstep that cedes ground to more agile markets like the U.S. and Hong Kong. The delay isn't just bureaucratic—it's a potential multi-billion dollar opportunity cost, a classic case of perfect being the enemy of profitable.

Building Ahead of the Curve

Behind closed doors, product development teams are in overdrive. They're structuring funds, drafting prospectuses, and securing custody solutions—all for an approval that's years off. The strategy is clear: be first in line when the gate finally lifts. It's a calculated bet on regulatory inevitability, fueled by relentless global demand for digital asset exposure.

Why the Rush?

Institutional hunger is the engine here. Pension funds, asset managers, and retail investors are all clamoring for regulated, familiar vehicles to access crypto. The 2028 timeline ignores this mounting pressure, treating market demand like a theoretical exercise rather than a tidal wave. One fund manager quipped they're designing for a future the regulator hasn't even acknowledged yet—finance's version of building a spaceship while the government debates the existence of gravity.

The clock is ticking. Every month of delay isn't just lost time; it's lost capital flowing to competitor nations. Japan's famed financial conservatism, often a strength, now risks looking like complacency. The product blueprints are ready. The market is begging. The only thing missing is a green light from a regulator still reading the manual.

ETFs give crypto the credibility it lacks

Director at Convano Consulting, Motoyuki Azuma told Cryptopolitan that the biggest hurdle with crypto has been credibility in the eyes of investors.

“The credibility of holding BTC in our business portfolio sometimes faces scrutiny from
certain Japanese investors,” said Azuma. “ETFs make crypto holdings look more official and more trusted, and easier to explain to investors.”

A survey conducted in 2024 by Laser Digital Holdings, a subsidiary of Nomura Holdings, found that 54% of institutional investors said they plan to invest in crypto assets within the next three years.

Despite the backdrop of inflation and a weakening Japanese yen, Azuma said short-term crypto strategies have become increasingly challenging.

“Market to Bitcoin Net Asset Value (mNAV) strategies are harder than before, but if companies or individuals want to hold crypto assets as a part of a long term alternative asset plan, then crypto ETFS are going to be much easier.”

Regulatory hurdles slow crypto ETFs

Any crypto ETF would still require approval from the Tokyo Stock Exchange. Crypto ETFs are also contingent on an amendment to the Investment Trust Act, which would add crypto assets to the list of “specified assets” that investment trusts are permitted to hold.

If authorized, the products would allow investors to gain exposure via existing securities accounts.

Azuma expressed concern that the 2028 timeline is far too late. He suspects it is designed to give crypto exchanges as well as the Tokyo Stock Exchange time to update their structural and operational frameworks.

Security breaches shape regulatory caution

Japanese regulators emphasize the need for strict custody controls, asset segregation, and investor protection measures in light of previous security breaches within local crypto exchange platforms such as DMM.

The exchange lost 48.2 billion JPY (approx. $306 million USD) in Bitcoin in 2024. North Korean hackers affiliated with the notorious Lazurus Group, TraderTraitor, are believed to be behind the theft.

A legal shift that changes everything

The FSA plans to recognize crypto assets as financial instruments under the Financial Instruments and Exchange Act (FIEA) in 2026. With that framework in place, regulators could MOVE to approve crypto ETFs, potentially in tandem with new crypto tax rules.

Currently, crypto assets in Japan are legally classified as a “means of payment” and are taxed as much as 55% under a “miscellaneous income” category. Under the government’s 2026 tax reform plan, certain types of crypto assets would be subject to a flat 20% tax, similar to stocks and investment trusts.

The shift is expected to lower barriers for institutional and retail investors alike, helping unlock demand for regulated investment products. Industry projections suggest Japan’s crypto ETF market could reach roughly 1 trillion JPY ($6.5 billion) in assets after regulatory approval.

Financial giants enter Japan’s crypto ETF race

A host of Japanese financial institutions are preparing or studying crypto ETF products. These include Nomura Asset Management, SBI Global Asset Management, Daiwa Asset Management and Mitsubishi UFJ-linked subsidiaries.

SBI Holdings is planning to launch the country’s first crypto ETF, which tracks both Bitcoin and XRP. It has released a mixed investment trust contingent on regulatory approval with a 51% allocation of gold-based ETFs and a 49% allocation of Bitcoin ETFs.

Its second ETF product will consist of Bitcoin and XRP, which SBI aims to list on the Tokyo Stock Exchange.

On January 28, Tomohiko Kondo, President and CEO of SBI Holdings subsidiary SBI VC Trade, told a small gathering of business leaders that crypto assets have moved beyond simple buying and selling.

“Investors can now generate returns through funding income, hedging strategies and options transactions that reduce reliance on Bitcoin prices rising and falling.”

2026 marks the start, not the finish

Still, that growing institutional sophistication does not mean crypto-linked financial products will be available to investors anytime soon.

Nomura Holdings Senior Managing Director, Hajime Ikeda, told Japanese media that the changing law won’t make it possible to deliver crypto ETFs to the market right away.

He said that while ETFs are an indispensable financial product for securities firms, rushed ETFs would be a mistake.

Ikeda said there are a number of practical elements that remain undecided by the industry as a whole. These revolve around crypto asset custody, security, customer information protocols, and responsibility in the event of an incident such as theft.

He said addressing these issues will be essential before crypto assets can transition from a standalone asset to being a part of a company’s Core balance sheet.

He said that 2026 is shaping up to mark the start of an evolution in Japan’s financial services sector.

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