• Japan’s FSA to allow crypto ETFs by 2028 with flat 20% tax on gains, Nikkei reported.
• South Korea’s ruling party pushes Digital Asset Basic Act through task force, but June elections cloud timeline.
• Hong Kong remains Asia’s only market with retail crypto ETFs, though assets lag far behind US peers.

Japan is set to legalize cryptocurrency exchange-traded funds (ETFs) by 2028, marking a major shift in Asia’s second-largest economy toward mainstream crypto adoption, according to a Nikkei report.

With a proposed tax cut from 55% to 20% and major asset managers preparing products, Japan is positioning itself as a late but potentially significant entrant in Asia’s fragmented crypto ETF landscape.

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Japan’s Regulatory Overhaul

The FSA plans to amend the Investment Trust Act’s enforcement order by 2028. Cryptocurrencies would be added to the list of eligible “specified assets” for investment trusts. After Tokyo Stock Exchange approval, investors could trade crypto ETFs through standard brokerage accounts. The structure would mirror existing gold and real estate ETFs.

Nomura Asset Management and SBI Global Asset Management are already preparing to develop products ahead of the regulatory changes. Industry estimates suggest Japan’s crypto ETF market could reach ¥1 trillion ($6.7 billion) in AUM. The projection is based on comparisons with the US market. US-listed Bitcoin ETFs have amassed over $120 billion in assets.

Tax Cut from 55% to 20%

Perhaps the most significant change involves taxation. The FSA plans to submit legislation to the Diet in 2026. The bill would reclassify cryptocurrencies under the Financial Instruments and Exchange Act. This would reduce the maximum tax rate on crypto gains from 55% to a flat 20%, aligning crypto gains with those of stocks and investment trusts.

The current tax burden has been a major deterrent for Japanese investors, many of whom have hesitated to realize gains on their crypto holdings. The proposed rate cut could unlock significant pent-up demand.

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Investor Protection Framework

Japan’s approach reflects lessons learned from recent market turmoil. The FSA will require trust banks handling ETF custody to implement strict security protocols, addressing concerns heightened by the 2024 DMM Bitcoin hack that resulted in ¥48.2 billion in losses.

Asset managers and securities firms must also enhance risk disclosures and operational safeguards ahead of the 2028 launch.

Asia’s Fragmented Crypto ETF Landscape

Across the region, regulatory approaches vary widely.

Hong Kong remains Asia’s only market with spot crypto ETFs available to retail investors, having launched six Bitcoin and Ether products in April 2024 and adding Solana ETFs in October 2025. Assets under management have reached approximately $500 million—a fraction of US levels.

South Korea’s ruling Democratic Party is pushing ahead with its own Digital Asset Basic Act through a dedicated task force. The party aims to finalize a draft by month-end. However, the timeline remains uncertain ahead of the June local elections, with discussions on a Bitcoin spot ETF—a key campaign promise of President Lee Jae-myung—potentially delayed.

Taiwan expanded access in February 2025, allowing domestic investment trust funds to invest in overseas passive crypto ETFs. The FSC is also advancing a dedicated crypto law, with Chairman Peng Jin-lung indicating a New Taiwan dollar-backed stablecoin could launch by mid-2026.

Singapore has not approved crypto ETFs for retail investors, with the Monetary Authority maintaining that digital tokens are unsuitable for retail collective investment schemes.

By waiting until 2028, Japan can learn from other markets’ experiences. But with South Korea’s ruling party pushing its own legislation and Hong Kong expanding product offerings, the regional race is far from settled.

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