Table of Contents
An ETF (Exchange Traded Fund) is an investment trust listed on a stock exchange. There are two types: index-based, which tracks a specific index such as the Nikkei Stock Average, and active-based, which does not have such an index.
It may be obvious to those interested in finance, but to explain it simply, it is easy to understand if you think of it as a packaged product that contains a small number of securities such as stocks handled by a stock exchange. Since you can invest in multiple stocks selected by the stock exchange all at once, it is easy to hedge risks and the initial investment costs are low. Furthermore, index-based funds have less volatility and are more stable than investing in a single company, making them a popular financial product for beginner investors.
In January of this year, the SEC announced that it had approved a Bitcoin spot ETF. Although the SEC approved a Bitcoin futures ETF in 2021, it had not approved a Bitcoin spot ETF for nearly the past 10 years.
The SEC cited "risk of price manipulation" as the reason for this, but in 2023, the SEC lost a lawsuit that found it wrong to refuse to convert untraded funds managed with Bitcoin into ETFs. The SEC can no longer continue to refuse cryptocurrency spot ETFs. Four months later, an Ethereum spot ETF was approved, as if to open the floodgates.
SEC Chairman Gary Gensler has stated that he is still skeptical of cryptocurrency trading, and has warned that investors should be careful about products whose value is tied to cryptocurrency. However, with the SEC's approval, there is no doubt that cryptocurrency, which has been viewed as a "speculative product," has taken its first step as an "investment product."
This year, the US presidential election will also be held, so depending on the results, the SEC chairman may be replaced. In some cases, it is possible that legislation for cryptocurrency ETFs will be actively developed. By the way, it should be noted that Trump, who was anti-cryptocurrency, has taken a conciliatory stance in this presidential election.
● Some are made up of multiple cryptocurrencies
● Trading rules follow those of the stock exchange and securities company
● Being listed on a stock exchange ensures transparency and liquidity of transactions
Meanwhile, as of August 2024, cryptocurrency ETFs are not being handled at stock exchanges in Japan, and there are no indications that securities companies are aiming to list cryptocurrency ETFs. This is because cryptocurrencies are not included in the "specified assets" under Japan's Investment Trust Act. In order for investment trust companies to handle cryptocurrency ETFs, the Investment Trust Act must first be amended.
The only positive news is that on July 16, SBI Holdings, a Japanese financial holding company, announced that it would establish a new company with Franklin Templeton, a major US investment management company. It was announced that this new company will aim to provide ETFs and digital securities that target cryptocurrencies. However, there is currently no further information.
However, looking around Asia, Bitcoin and Ethereum ETFs have begun trading on exchanges in Hong Kong, and there are reports that the Australian stock exchange will approve a Bitcoin spot ETF within this year. Japan will likely follow the global trend.
Crypto assets are too volatile, so investors have found them difficult to get involved with. However, if they are made into ETFs, it will be possible to invest while diversifying risk. Therefore, it is expected that attractive venture businesses in the Web 3.0 field will see a large inflow of funds from institutional investors as a new investment destination.
By the way, it is widely expected that the next crypto asset ETF to be approved will be Solana (SOL). SOL is said to be a third-generation blockchain, and has faster transaction approval speeds than previous crypto assets and lower gas costs than Ethereum. It also comes with an interoperability function that allows blockchains to link together by default.
The Financial Services Agency is still reluctant to approve crypto asset ETFs because tax rates cannot be determined without streamlining the Investment Trust Act. However, looking at recent trends in Japan and around the world, there is no doubt that people are hoping for crypto asset ETFs to be approved in Japan sooner than expected.
・The US Securities and Exchange Commission (SEC) will approve a Bitcoin spot ETF on January 10, 2024
・In Japan, crypto assets are not included in the "specified assets" under the Investment Trust Act, so they cannot be introduced
・Due to tax issues, the Financial Services Agency is still reluctant to amend the law
Volatility: An index showing the rate of fluctuation in asset prices. A high value indicates a high-risk, high-return product.
Spot ETF: An ETF that invests in physical financial products. Linked to the spot price of the investment target.
Futures ETF: An ETF that links to the futures price of financial products. Also refers to ETFs that invest in futures trading.
Solana (SOL): A cryptocurrency announced by Anatoly Yakovenko in 2017 and implemented by Greg Fitzgerald. It has a data processing speed about 3,600 times faster than Ethereum.
Gas fee: A fee paid when trading on the blockchain or executing a program called a smart contract.
Interview Iolite FACE vol.10 David Schwartz, Hirata Roi PHOTO & INTERVIEW "Yukos" Special feature "Trends in the cryptocurrency industry in Japan", "Trump vs. Harris: What will happen to the cryptocurrency industry?", "Was the reputation economy a prophecy?" Interview: Simon Gerovich, Metaplanet Co., Ltd., Kim Dong-Gyu, CALIVERSE Series Tech and Future Sasaki Toshinao...etc.
