Japan – one of the most crypto-friendly countries – is taking a step back. Japan's supervisor – Financial Services Agency (FSA) – was planning to allow crypto derivatives, but according to Bloomberg's sources is going to bar the initiative. However, the financial watchdog may approve crypto exchange-traded funds (ETFs). An ETF is a security that tracks a stock index, a commodity, bonds, or a basket of assets.
FSA decided to take a conservative attitude. Japan dropped support for crypto derivatives, and the supervisor will give more oversight power to self-regulatory bodies. Additionally, FSA will cap the leverage that can be offered by crypto brokers.
Japan’s decision to shelve plans for crypto derivatives comes a year after Cboe Global Markets Inc. and CME Group Inc. listed futures tracking Bitcoin. The instruments have attracted growing but still, limited demand from institutional investors, with combined open interest across both currently at about $81 million, according to exchange data – writes Bloomberg's Yuji Nakamura.
The Japanese market has much bigger potential as the Tokyo Stock Exchange provides more liquidity. Japan’s ETF market is worth $335 billion.