Bloomberg today reported that Japan’s Financial Services Agency (FSA) abandoned plans to allow listed crypto derivatives but may approve exchange-traded funds (ETF) that track crypto assets.
The ban of crypto futures in one of the largest crypto markets is another setback for investors betting on institutional demand to end the bearish market environment. On the other hand, the approval of crypto ETFs could significantly revive demand for cryptos from retail investors.
Japan’s decision to shelve plans for crypto derivatives comes a year after the U.S. regulators approved crypto derivates provided by Cboe Global Markets Inc. and CME Group Inc. The instruments have attracted growing demand from institutional investors, with combined open interest across both currently at about $81 million, according to exchange data.
As Bloomberg rightfully pointed out, ETFs remain the holy grail for many in the crypto industry who hope that they could give crypto products more legitimacy in the eyes of institutional, while making them more accessible to retail investors who already have a brokerage account. But U.S. and European regulators have so far shot down dozens of such proposals, citing worries about price manipulation or the security of the underlying crypto assets.
