Japan's bitcoin (BTC) spot exchange-traded fund (ETF) market could grow to about $18.4 billion (about 26 trillion won) by fiscal 2028, an outlook showed. Industry participants believe Japan could emerge as Asia's hub for regulated cryptocurrency markets if improved retail access, institutional inflows and tax reform align.

On July 24 local time, blockchain outlet U.Today reported that digital asset manager XWIN (엑스윈) forecast the market would reach $18.4 billion by fiscal 2028 as Japan prepares to launch its first bitcoin spot ETF.

XWIN said the projection is not excessive optimism but a calculation based on realistic funding 규모. It said $18.4 billion is just 0.13 percent of Japanese households' roughly $14.6 trillion in financial assets. It added the figure assumes only about a 1 percent shift of funds even compared with Japan's equity investment fund market.

The report presented three channels for inflows into bitcoin spot ETFs: retail investors, institutional investors and expanded product supply by financial firms.

Retail investors are expected to be able to invest in bitcoin through familiar securities firm applications and NISA accounts, Japan's tax-free small investment scheme, without using cryptocurrency exchanges.

Tax reform was also cited as a key variable for market expansion. Japan currently applies a tax rate of up to 55 percent to profits from cryptocurrency investments, but a plan is being reviewed to cut it to around 20 percent, in line with general financial income. XWIN said retail investment demand could increase sharply if the tax cut materialises.

Institutional inflows were also highlighted as an important growth driver. XWIN said Japanese pension funds have begun to consider bitcoin as an asset with low correlation to the U.S. dollar and as an inflation hedge. Japan's National Business Pension Fund in Okayama is reportedly allocating the first 1 percent of its assets under management to cryptocurrencies. The report said demand for early-stage ETFs would broaden further if conservative institutional investors begin to participate in the market.

Competition among large domestic financial firms to launch products was also cited as a factor supporting growth. SBI Holdings has proposed launching a range of cryptocurrency ETFs, including a composite ETF based on bitcoin and XRP. The company has set a target of securing 5 trillion yen in assets under management within the next 3 years.

XWIN forecast that if the growth trend continues, Japan's bitcoin spot ETF market could reach $18.4 billion even before fiscal 2028.

The market views the passage of an amendment to the Financial Instruments and Exchange Act and whether Japan's Financial Services Agency (FSA) will accept the first bitcoin spot ETF application as key variables. XWIN said that after the制度 is in place, the pace of inflows will be determined by how quickly securities firms integrate crypto assets into mainstream investment apps and whether the reform to cut the crypto tax rate to 20 percent is implemented.

XWIN said the $18.4 billion forecast may look large on the surface but is closer to a "restrained economic calculation". It also forecast Japan could grow into Asia's leading regulated cryptocurrency market capable of competing with the United States if it completes regulatory preparations without setbacks.

Industry participants say Japan's discussion of bitcoin spot ETFs will go beyond launching a single financial product and serve as a catalyst to expand retail access, attract institutional funds and spur product competition among financial firms. If first ETF approval and tax reform materialise, attention is focused on whether Japan can establish itself as a new hub for Asia's digital asset market.