The Financial Services Agency of Japan is reported to be exploring the possibility of allowing exchange-trade funds (ETF) that track asset class a few months after it has abandon plans for cryptocurrency-based derivatives.
Citing reliable sources, Bloomberg is reporting that the Financial Services Agency is currently studying interest on ETFs tracking digital currencies. This comes after the agency denied the move to revise the country’s securities law that would have allowed cryptocurrency futures and options to be listed on financial exchanges. The agency deemed cryptocurrency futures as having no significant impact in the financial services industry and will only lead to stoke speculation.
Additionally, the report said that the FSA gave more oversight power to self-regulatory bodies, put most initial coin offerings under the scope of its securities law and cap leverage being offered by cryptocurrency brokers.
For some investors, exchange-trade funds brings more legitimacy to cryptocurrency products. It also makes these digital produces more accessible to those who already have existing brokerage accounts. Despite these facts, both U.S. and European regulators have shot down proposals relating to ETFs due to fear of price manipulation or security of digital assets.
If the FSA’s plan pushes through and ETFs get listed and legitimised in the Japanese stock market, this might attract more interest on cryptocurrency trading. However, this is still a long shot since even ETFS for more traditional asset classes such as stocks and bonds have not even abandoned their preferences for mutual funds over ETFs.