The Japanese financial watchdog look set to explore the possibility of cryptocurrency-based ETFs in 2019. The news comes after reports claiming Japan are abandoning crypto derivatives markets.

According to an anonymous source who spoke to Bloomberg, Japan are abandoning the idea of listing Bitcoin and Ethereum futures products. Instead, they are investigating the possibility of an ETF to track digital assets.

The Financial Services Agency are currently assessing the interest of tracking digital assets through an ETF. The FSA withdrew plans to write new securities laws last month, which would have enabled the listing of cryptocurrency futures products, concluding that the products would “achieve little” aside from spurring on speculation.

Japan has abandoned plans to allow listed derivatives based on cryptocurrencies but may approve ETFs https://t.co/XaNPNRbPPO — Bloomberg (@business) January 7, 2019

The regulator has been keeping a watchful eye on cryptocurrencies over the course of 2018 and early 2019, motivated by the CoinCheck heist that saw $500 million stolen from the Tokyo-based exchange last year.

While the listing of derivatives markets would increase the reach of cryptocurrency products to institutional investors, it hasn’t been bullish for the crypto markets in the past. At the end of 2017, the CBOE and CME listed Bitcoin futures when the price was at $20,000. What followed was a temperamental bear market that saw Bitcoin’s price drop to as low as $3,150 in 2018.

However, an ETF would give the cryptocurrency markets legitimacy in the eyes of institutional investors. VanEck and SolidX currently have applications pending with the SEC, and Japan’s willingness to explore the potential of an ETF is undoubtedly positive for the space.

Regulators have typically rejected ETF applications, citing price manipulation and security of digital assets as key concerns in their disapproval.

While many believe that an ETF would prevent manipulative price techniques like wash trading and spoofing, the SEC chairman Jay Clayton has an opinion to the contrary.

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