Japan is moving towards recognizing virtual assets as financial products and is considering the introduction of exchange-traded funds (ETFs) linked to cryptocurrencies. This shift comes after a previously reserved stance on virtual asset regulations. As Japan explores the possibility of a Bitcoin ETF, South Korean financial authorities have begun reviewing the implications of such a move.

According to the financial investment industry on the 4th, South Korea’s Financial Supervisory Service has analyzed Japan’s Financial Services Agency’s (FSA) recent legislative trends on virtual assets and shared its findings with relevant organizations. This follows a report by Nihon Keizai Shimbun (Nikkei) last month, which revealed that Japan’s FSA was considering classifying virtual assets as financial products similar to securities and was even assessing the introduction of a cryptocurrency ETF.

South Korean financial regulators noted that Japan’s FSA has not denied the report, making the possibility of such regulatory changes more credible. The report further outlined that Japanese authorities are reviewing the scope of crypto assets to be included in financial products, expanding disclosure requirements for crypto-related companies, and considering mandatory registration for crypto asset investment advisors.

It is expected that discussions in Japan will conclude within the first half of the year, leading to a formal government announcement. Legislative procedures are likely to be completed in the second half, with a bill anticipated to be submitted to the National Assembly next year.

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The potential introduction of Bitcoin ETFs in Japan raises questions about South Korea’s regulatory approach. The Korean Financial Services Commission recently reaffirmed its opposition to virtual asset ETFs, citing Japan’s stance at the time as a key reason. At a press conference following the Virtual Asset Committee meeting last month, Kim So-young, Vice Chairman of the Financial Services Commission, emphasized that South Korea would continue to carefully assess the matter. He pointed out that several major countries, including the UK and Japan, had not yet introduced Bitcoin ETFs, reinforcing South Korea’s cautious approach.

With Japan now moving forward, the Korean government may face increasing pressure to reevaluate its position on virtual asset ETFs.