On January 4th, the first trading day of the New Year in Japan, the stock market opened high and continued to rise, with the Nikkei 225 index at one point increasing by about 3% and moving in the same direction as the South Korean stock index. On the same day, the Japanese Minister of Finance and Financial Services made headlines with statements about "allowing investment advisors to invest in crypto assets" and "starting to study crypto asset ETFs." With the new NISA tax-advantaged mechanism entering its second year of operation and the official rare positive discussion about the possibility of investment channels for crypto assets, the potential migration path of East Asian funds between the stock market and the crypto market is becoming more worthy of re-examination than ever before.
The Real Weight of Japan's Financial Services Agency Easing Crypto ETFs
This week, the Japanese Minister stated at a New Year press conference that they would "allow registered investment advisors to invest in crypto assets within entrusted asset portfolios" and would "study ETF product forms that include crypto assets." This has been interpreted by the market as a key loosening of Japan's compliance channels for crypto investment. Unlike the previous strict delineation of crypto assets within exchanges and a very limited number of individual risk preferences, this statement for the first time places "investment advisors," "ETFs," and "crypto assets" in the same context, signaling an openness to introducing related assets into institutional wealth management. It is worth noting that the briefing did not provide any timeline for the launch of crypto ETFs, the composition of the underlying assets, or scale considerations. The regulatory authorities are still at a principled stage of "can be studied" and "is being discussed," and the transition from policy declaration to actual products may still undergo a lengthy period of negotiation and evaluation.
From New NISA to Stock Frenzy: The Accelerated Shift in Japanese Fund Sentiment
On the first trading day of the New Year, the linkage between the Japanese stock market and the new NISA mechanism became the primary window for observing Japanese investor sentiment. The new NISA, which will be fully implemented in January 2024, is seen as Japan's version of a "national wealth management upgrade project." It expands the personal tax-exempt investment quota and extends the holding period, attempting to guide household funds from deposits to risk assets. On January 4th, during this New Year trading window, both the Nikkei 225 index and the TOPIX index opened high, with the maximum intraday increase approaching 3%, rising in sync with major South Korean stock indices, indicating a post-holiday resonance in East Asian stock market sentiment. The willingness of new funds to enter the market brought by the new NISA overlaps with the policy discussions on crypto asset investment channels, creating a subtle intersection on the timeline: on one side, encouraging residents to embrace the capital market through tax incentives, and on the other, discussing whether to include crypto assets in a broader compliant wealth management "menu." This parallel policy environment creates imaginative space for future asset allocation combinations between "stocks—funds—crypto assets" for Japanese residents and institutions.
The Internal and External Game of Japan's Crypto Policy and Regulatory Logic
Looking at a longer cycle, Japan's attitude towards the crypto industry is not a single linear path. After the Mt. Gox incident in 2014, Japan established a registration system for crypto asset exchanges through the Payment Services Act, becoming one of the first developed economies to legally recognize the existence of crypto assets. However, it simultaneously imposed very strict restrictions on leverage, advertising, and listed tokens. The recent statement of "allowing investment advisors to invest in crypto assets and studying the possibility of ETFs" can be seen as a rebalancing act between preventing systemic risks and competing for financial innovation discourse. On one hand, Japanese regulatory authorities face the real pressure of high household savings rates, prolonged low interest rates, and low domestic asset returns; the new NISA itself was created to leverage dormant savings. On the other hand, if Japan continues to "build high walls" in the globally active new track of crypto assets, it will inevitably weaken Tokyo's attractiveness in the competition for Asian financial centers. Thus, Japan has chosen to start with "the most easily regulated and understood by institutions" investment advisors and ETFs, essentially digesting crypto asset risks within a traditional financial framework while maintaining regulatory visibility, rather than allowing retail investors to operate in a high-volatility environment without protection.
Differences in Regulatory Paths Between the U.S. and Japan and Resonance Space
In comparison to the U.S., the signals currently released by Japan contain both imitation and differences. The spot BTC ETF approved in early 2024 in the U.S. recorded a net inflow of $471.3 million in its first week (data from a single on-chain and secondary market statistical source), becoming a key bridge for traditional funds to enter crypto assets. Japan's discussion of "studying crypto asset ETFs" is clearly influenced by the U.S. experience, but in terms of regulatory logic, Japan emphasizes "examining new products within the existing securities investment trust framework," rather than creating a separate channel for crypto assets. The commonality between the U.S. and Japan is that both are trying to use familiar financial vehicles like ETFs to solve a whole set of problems related to custody, security, valuation, and compliant distribution, thereby packaging the highly fragmented and liquidity-dispersed crypto market into standardized targets acceptable to pension funds, advisory accounts, and family offices. The difference lies in that the U.S. is driven from the bottom up by capital markets and institutional lobbying to promote ETF approvals, while Japan tends to have regulatory and financial departments set boundaries from the top down, with financial institutions designing products within those boundaries. This also means that Japan's path may be slower, but once formed, its stability and institutional continuity may be stronger.
How Will East Asian Funds Reprice Between the Stock Market and Crypto?
Looking ahead, the combined effect of Japan's new NISA and potential crypto ETFs may reshape the East Asian fund landscape along two paths. First, on the resident side, as the range of investable assets under tax-exempt accounts gradually expands, the allocation ratio of Japanese households among Japanese stocks, global index funds, and crypto assets is expected to be reshuffled, enhancing the yen's participation in the global crypto market, rather than merely reflecting through over-the-counter trading and overseas platforms. Second, at the institutional and regional fund level, if Tokyo becomes the second mature market for systematically laying out compliant crypto ETFs after Wall Street, then funds with close financial ties in Korea, Singapore, and even the Middle East may configure through Tokyo channels, thereby deriving a new hub for crypto asset flows radiating across East Asia outside the "New York—Tokyo" dual center. Of course, the briefing did not provide any timeline or technical roadmap for the launch of Japan's crypto ETFs, and all current discussions remain at the level of principle. Ultimately, whether East Asian funds will migrate en masse to crypto assets depends not only on regulatory details but also on the macro interest rate environment, the trend of the yen exchange rate, and whether core assets like BTC and ETH can continue to provide relatively more attractive risk-adjusted returns than traditional stocks over the next several cycles.
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