Japan’s Financial Services Agency (FSA) has discarded proposals permitting listed derivatives based on cryptocurrencies but stated it may approve exchange-traded funds (ETFs) which track the asset class, according to Bloomberg.

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Last month, the FSA decided against carrying out amendments to the Japan’s securities law, allowing cryptocurrency futures and options to be registered on large financial exchanges, stating those products would fuel speculation.

However, the regulator is assessing industry interest in ETFs to track cryptocurrencies, as stated by a person aware of the agency’s feelings, who requested anonymity discussing private plans.

In addition to amending securities legislation through the Financial Instruments and Exchange Act, the FSA’s recommendations are expected to cause variations to the Payment Services Act, the person said.

Last year, Chicago-based Cboe Global Markets Inc. and CME Group Inc. listed futures tracking Bitcoin, attracting growing demand from institutional investors, with a combined value of about $81 million, according to exchange data.

In November, Securities and Exchange Commission (SEC) Chairman Jay Clayton said investors expect trading in commodities underpinning ETFs to be free from the risk of manipulation.

“Those kinds of safeguards don’t exist in many of the markets where digital currencies trade,” said Clayton.

In Switzerland, the Amun Crypto Basket Index ETP began trading in November, under the ticker HODL.

However, an ETF listed in a larger and more-liquid Japanese stock market could attract more interest.

Currently, Japan’s ETF market is worth $335 billion, with about 75 percent owned by the central bank. In the U.S., outstanding ETFs account for around $3.7 trillion.

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