The Japan Financial Services Agency recently updated their Q&A document, and their stance is quite clear—don’t expect to legally offer contracts for difference (CFDs) tied to overseas crypto ETFs in Japan for now.

The official reasoning is straightforward: No crypto ETF has ever been approved domestically in Japan. Allowing investors to trade overseas crypto ETFs via CFDs before that happens? The regulatory framework and investor protection mechanisms just aren’t there yet.

Here’s the logic from the FSA: these CFD products essentially track the spot price of crypto assets, so they should be regulated as crypto derivatives. But the problem is, the relevant risk disclosure standards and supporting systems are incomplete. Put simply: If the foundational rules aren’t in place, there’s no rush to introduce products built on top of them.

Because of this policy, some platforms that had planned to launch these offerings in the Japanese market will likely have to rethink their strategies.