SBI Holdings, a prominent financial services company, has recently made a significant move in the crypto space by submitting applications to Japan’s Financial Services Agency for the approval of two exchange-traded funds (ETFs) tracking Bitcoin and XRP. This marks the first dual-asset spot crypto ETF proposal in Japan and comes at a time when the regulator is considering reclassifying digital assets as financial instruments under the Financial Instruments and Exchange Act.
The proposed ETFs, outlined in SBI’s investor materials on August 1, include a crypto-asset-only ETF comprising Bitcoin and XRP, as well as a blended offering that combines digital assets with gold. The former fund would allow investors to directly allocate to both tokens under a single wrapper, while the latter proposes exposure to Bitcoin and XRP, capped at 49%, with gold making up the majority of the portfolio.
This move by SBI follows its recent joint venture with Franklin Templeton in July, with the aim of launching a series of digital asset investment vehicles that bring traditional asset management practices into the crypto space. Franklin Templeton, a global asset manager with over ¥300 trillion in assets under management and a wide range of ETF products, will provide the necessary infrastructure and compliance expertise for the rollout of these crypto ETFs. The suite of ETFs is expected to eventually cover Bitcoin, Ethereum, and XRP, pending regulatory approval and evolving regulations.
The regulatory landscape in Japan is currently undergoing revision, with the FSA proposing a unified 20% tax on crypto gains and recognizing crypto ETFs as regulated financial products in a discussion paper published in late June. These proposed reforms aim to address longstanding issues in Japan’s crypto market, such as the tax treatment of crypto gains and the lack of formal recognition for crypto investment products. If implemented, these changes would enable the listing of crypto ETFs under existing securities laws.
SBI’s ETF initiative also aligns with its strategic exposure to XRP, as the firm is one of Ripple’s largest outside shareholders and operates remittance corridors across Asia using the token through its SBI Remit subsidiary. By including XRP in a regulated ETF framework, SBI aims to further institutionalize the asset in Japan, where it has historically been well-received.
Despite the cooling demand for crypto ETFs globally, with spot Bitcoin ETFs experiencing net outflows, Japan’s domestic capital base remains substantial. However, questions remain about the institutional appetite for multi-asset crypto funds, especially considering XRP’s thinner liquidity compared to Bitcoin. Market makers may face challenges in accurately tracking fund net asset values in real time.
While SBI and Franklin Templeton have not provided a specific timeline for the launch of these ETFs, the final approval process is subject to parliamentary scheduling and policy finalization, particularly regarding the proposed tax code changes. If successful, Japan would be the first major economy to approve a spot XRP ETF.
The FSA is currently reviewing the ETF filings as part of its evolving approach to digital asset oversight. Formal guidance on crypto custody standards, price feed integrity, and potential leverage caps are awaited before further products are approved. SBI’s ETF proposals will test how quickly Japan’s legislative environment can adapt to meet the demand for institutional crypto investments.