[NEWS] Industry-wide proposal to approve issuance of Bitcoin spot ETF in Japan

In order to gain approval for the issuance of cryptocurrency ETFs in Japan, 13 companies, including securities companies, asset management companies, trust banks, and domestic cryptocurrency exchanges, as well as law firms and tax accounting firms, have compiled a cross-industry proposal. On the 25th, the companies announced the proposal as a "proposal for the creation of cryptocurrency ETFs in Japan."

The proposal clearly states that Bitcoin (BTC) and Ethereum (ETH), which have high circulation and are well-known, are "stocks that should be prioritized for inclusion in cryptocurrency spot ETFs." It also states that the holding ratio of both stocks deposited with domestic cryptocurrency exchanges is approximately 90%, accounting for the majority.

Cryptocurrency spot ETFs are becoming established as a well-known investment product overseas, but in Japan, the thinking varies from company to company and industry to industry, and there was no unified view. This time, volunteers familiar with cryptocurrencies from various industries gathered together to call for the establishment of legal systems, etc.

The background to this is that some crypto assets, such as Bitcoin, have been shown to be assets that contribute to long-term asset formation in terms of market capitalization and performance, and the trend of holding crypto assets in physical form has spread in Japan, with a stronger tendency to hold them for longer periods, and there is a growing movement to position crypto assets as an investment target for the general public.

In addition, in the United States, a Bitcoin spot ETF was approved in January and was a great success, and the movement to position crypto assets as an investment target asset is rapidly spreading.

On the other hand, in Japan, crypto assets are not included in the specified assets that are the investment target assets of investment trusts, so it is not possible to create an ETF that invests in crypto assets.

The purpose of this proposal is to summarize the issues regarding the realization of the creation of a crypto asset spot ETF in Japan, and to propose, as the consensus of the participating members of this study group, the development of various systems necessary to make the creation possible.

Based on the contents of the white paper, Anderson Mori & Tomotsune Foreign Law Joint Enterprise, SBI Securities, SBI VC Trade, Kataoka & Sogo Law Office, So & Sato Law Office, Daiwa Securities Group, Daiwa Asset Management, Nomura Asset Management, Nomura Securities, Bitbank, bitFlyer, Sumitomo Mitsui Trust Bank, Mizuho Trust & Banking, Mitsubishi UFJ Trust & Banking, and others are participating in this proposal.

Crypto assets should be subject to separate taxation

The main points of this proposal are: "We should proceed with the development of various systems that enable the creation of crypto asset ETFs, etc.," "We should subject crypto asset ETFs, etc. and spot transactions of crypto assets to separate taxation," and "We should prioritize major crypto assets as the subject of discussions regarding the creation of crypto asset ETFs, etc.."

Tax reform of crypto assets is essential to realize crypto asset spot ETFs. Currently, profits from crypto assets are classified as miscellaneous income and are subject to a maximum tax rate of 55%. The crypto asset industry has been calling for tax reform for many years to make crypto assets subject to separate taxation. Along with the approval of cryptocurrency ETFs, cross-industry manpower will be needed to reform the tax system.

Reference: Azsa Audit Corporation
Image: Shutterstock

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