Daiwa Securities CEO Pushes for Japan’s Crypto ETF Approval Amidst Slumping Profits from China

In a recent interview with Bloomberg, Akihiko Ogino, CEO of Daiwa Securities, advocated for the approval of cryptocurrency exchange-traded funds (ETFs) in Japan, emphasizing the country’s potential to embrace this growing sector. As Japan’s second-largest brokerage firm, Daiwa has been part of a larger movement among financial institutions in Japan pushing for regulatory reform to enable crypto-backed ETFs.

While Daiwa currently offers the Daiwa ETF Nikkei 225, an index-based ETF in Japan, Ogino did not specify if the firm itself plans to launch a crypto-backed ETF in the near future. However, he expressed strong support for the country to allow crypto ETFs to “debut,” a sentiment shared by several other major Japanese financial institutions.

Growing Support for Crypto ETFs

Daiwa Securities is not alone in its call for crypto ETFs. In October 2023, top Japanese financial firms such as Mitsubishi UFJ, Sumitomo Mitsui, and Nomura Securities joined forces to submit a proposal urging the Japanese government to prioritize Bitcoin and Ethereum for crypto-backed ETFs. This collaborative effort highlights the growing interest among Japanese financial institutions to tap into the expanding global crypto market.

Despite this momentum, Japan’s regulatory environment remains a significant obstacle. The country’s cautious stance on crypto, shaped by past incidents such as the infamous Mt. Gox exchange hack and issues surrounding DMM, has led to a lingering negative perception of digital currencies. Many experts believe it will take time before Japan fully embraces crypto-backed ETFs due to these historical concerns and ongoing regulatory constraints.

Japan's Monetary Policy and Economic Outlook

Ogino also offered insights into Japan’s economic outlook, particularly in relation to the country’s central bank policies. He predicted that the Bank of Japan (BOJ) is likely to tighten monetary policies in the coming year. Daiwa expects the BOJ to raise its policy interest rate by 25 basis points in January 2025, from 0.25% to 0.5%, with further increases expected by the end of 2025, reaching 0.75%.

Ogino’s forecast is based on the BOJ’s recent move to reduce its purchases of Japanese government debt, which is expected to increase the supply of bonds available for market trading. This, in turn, could stimulate market activity and create potential opportunities for investors.

Struggling in China’s Market

While Daiwa Securities is focusing on potential growth opportunities in Japan, the firm has faced challenges in its China operations. Ogino acknowledged that the pace of business in China has been slower than anticipated, making it “a bit questionable” whether the firm will see profitability in the Chinese market in the upcoming year.

Official data supports this concern, showing that the combined revenue of securities firms in China fell by 9%, dropping to 203.3 billion yuan ($27.9 billion) in the first half of 2024 compared to the previous year. With these results in mind, Daiwa is now considering strategies to pivot and explore profitability opportunities in 2026, rather than in the immediate future.

Employee Wage Increases and Focus on Internal Growth

In an effort to retain talent and strengthen its operations, Daiwa Securities has announced plans to raise employee wages by 5% or more in April 2025. Ogino emphasized the company’s focus on “appropriately growing and training” its existing workforce to excel in yen-based trading, without the need for significant external hiring.

This move reflects Daiwa’s broader strategy of fostering internal growth while navigating the current challenges in both the Japanese and Chinese markets.

Conclusion

As Daiwa Securities pushes for the approval of crypto ETFs in Japan, the firm is balancing its enthusiasm for new financial products with the practical realities of operating in a sluggish Chinese market. While regulatory hurdles remain in Japan, the support from major financial firms signals a potential shift toward embracing the crypto sector. With the Bank of Japan poised to adjust its monetary policies, Daiwa is positioning itself for future growth, focusing on internal training and carefully navigating the complex global markets.