Japan’s largest online brokers, SBI Securities and Rakuten Securities, are taking significant steps into the world of digital assets by developing in-house investment trusts focused on Bitcoin and Ethereum specifically for retail customers. This initiative marks a pivotal shift in how millions of Japanese investors may engage with cryptocurrency.
These investment trusts are regulated funds that hold digital assets like Bitcoin, allowing investors to buy units of the trust instead of purchasing the cryptocurrencies directly. Currently, Japanese investors typically need separate accounts with cryptocurrency exchanges to acquire digital assets. By providing investment trusts through existing brokerage platforms, SBI and Rakuten aim to eliminate this barrier, making it easier for investors to gain exposure to Bitcoin and Ethereum in a manner that is more akin to purchasing mutual funds than trading on cryptocurrency exchanges.
SBI Securities is set to launch products through its affiliate, SBI Global Asset Management, which aims to amass approximately ¥5 trillion (nearly $32 billion) in assets within three years of the launch. SBI plans to oversee all aspects of these investment products, from design to distribution.
Rakuten Securities is pursuing a similar model via Rakuten Investment Management, encouraging customers to trade these products directly within their mobile apps, aligning with the way retail crypto transactions are currently performed. Both brokerages already operate licensed exchanges, which provides them with a solid infrastructure and existing regulatory relationships.
This push into crypto comes amid an evolving regulatory landscape in Japan, as signaled by a recent survey conducted by Nikkei. Out of 18 firms surveyed, 11, including notable names like Nomura, Daiwa, and Mizuho Securities, expressed interest in entering the crypto space once a comprehensive regulatory framework is established. This interest illustrates a broader trend among traditional finance (TradFi) participants, who are keen to adapt to this new market.
Japan’s Financial Services Agency (FSA) is reported to be considering new rules that would allow investment trusts and exchange-traded funds (ETFs) to hold cryptocurrency under the Investment Trust Act. This regulatory progression could potentially pave the way for spot crypto ETFs to be approved by 2028, with market analysts estimating the value of this segment could reach approximately $6.4 billion.
The reclassification of cryptocurrencies as financial instruments by Japan is part of a wider policy overhaul, which includes implementing stricter market rules such as annual disclosure requirements and prohibition of insider trading. These changes aim to align digital assets more closely with conventional securities and enhance investor protections.
For retail investors, this development offers a familiar and regulated environment for investing in cryptocurrency. It provides the benefits of established safeguards around custody, disclosure, and reporting through financial institutions that users already trust. The practicality of being able to purchase Bitcoin and Ethereum without needing to navigate new platforms or deal with security concerns associated with unknown exchanges will likely appeal to many.
However, there are trade-offs. While investment trusts simplify the process, investors would not own Bitcoin directly, resulting in management fees and counterparty risks that are absent in direct ownership scenarios. Fee structures will be crucial to monitor; as seen in the United States, increased competition among ETF issuers led to lower costs and greater adoption. The actions taken by the FSA regarding filings and the fees imposed by SBI and Rakuten will significantly influence the pace at which Japanese investors embrace these cryptocurrency investment products.
The developments in Japan follow global trends, with the launch of spot Bitcoin ETFs in the United States and Hong Kong introducing its own Bitcoin and Ethereum products. Japan is now aiming to integrate cryptocurrency more fully into its mainstream wealth management framework.
