Japan Compliance Report

Regulatory Overview

Regulatory Status

Dedicated crypto/VA legislation, licensing regime, active enforcement

Key Regulator(s)

Ministry of Economy, Financial Services Agency

Risk Level

low

Primary Legislation

Payment Services Act (amended 2017, 2020) (2017), Financial Instruments and Exchange Act (amended 2020) (2020), Stablecoin Law (effective June 2023) (2023)

Travel Rule

Adopted — Threshold: Implemented

Tax Reporting

Miscellaneous income tax (up to 55% for individuals). Crypto tax reform discussions ongoing. Corporate crypto holdings may be taxed at unrealized gains.. Selling crypto for fiat currency

Key Facts

• enforcement Regulator: Financial Services Agency (FSA). Regulator: National Tax Agency (NTA).
• general Banks: Deposits subject to prudential regulations; holders are protected up to 10 million JPY by deposit insurance Fund transfer service providers: Money deposits, bank guarantees, or entrusted safe assets Trust companies: Bank deposits; post-2025, up to 50% in low-risk short-term instruments Exchanges must register with the FSA to obtain operating licenses Customer due diligence procedures and detailed record-keeping are mandatory At least 95% of user assets must be kept in offline cold wallets (cold storage requirements) Customer funds must be segregated from exchange operating capital Strict anti-money laundering (AML) and know-your-customer (KYC) compliance is required
• licensing FSA/JFSA — CAESP registration, exchange oversight, stablecoin regulation, policy development JVCEA — Mandatory self-regulatory organization — token listing standards (green/white list), operational rules, member monitoring Payment Services Act (amended 2017, 2020) (2017) — CAESP registration, crypto-asset definition, customer asset segregation Financial Instruments and Exchange Act (amended 2020) (2020) — Security tokens (electronically recorded transferable rights), crypto derivatives — Type I FIB license Stablecoin Law (effective June 2023) (2023) — Electronic payment instruments — issuance restricted to banks, trust companies, fund transfer service providers. 100% fiat reserve required. VASP: CAESP registration with FSA. JPY 10M (~$70K USD) minimum capital. Must maintain positive net assets. 100% cold storage recommended for customer assets. JVCEA membership mandatory. 6-18 month application timeline. Token listings pre-screened by JVCEA. CUSTODY: Included under CAESP registration. Mandatory segregation of customer assets (trust account or equivalent). Multi-signature wallets, penetration testing, internal audits required. EXCHANGE: CAESP registration required. Margin trading capped at 2x leverage. Stablecoin intermediation requires separate fund transfer service provider registration.
• securities Financial Services Agency (FSA): Regulates securities and financial instruments in Japan. Website: https://www.fsa.go.jp/ Securities and Exchange Surveillance Commission (SESC): Oversees market surveillance under the FSA. Securities and Exchange Law (part of the FIEA), consolidating previous regulations. International Standing: Japan is a member of the Financial Action Task Force (FATF) and adheres to global AML/CFT standards. https://www.fatf-gafi.org/ Entities offering securities-related services, including those involving digital assets that qualify as financial instruments. Securities brokerage, underwriting, dealing in public offerings (Type I). Dealing in certain derivatives and intermediary services for collective investment schemes (Type II). Investment advisory and agency services (no minimum capital but requires JFSA registration).
• stablecoin EPI stablecoins: Fiat-backed with redemption at face value; regulated under PSA Chapter III-2. Crypto-asset type: Lacks guaranteed redemption; subject to crypto-asset intermediary rules, with no issuer-specific regulation beyond user protection for handlers. FSA outlined this in December 2022, with core rules effective June 2023 and refinements through 2024–2025.
• tax Miscellaneous income tax (up to 55% for individuals). Crypto tax reform discussions ongoing. Corporate crypto holdings may be taxed at unrealized gains. Selling crypto for fiat currency
• travel rule Travel Rule adopted — threshold: JPY 0 (no threshold) FSA announcement and implementation: https://www.sygna.io/blog/japan-implements-fatfs-crypto-travel-rule/; https://www.fsa.go.jp/en/news/2025/20250625/01.pdf FATF context via Ministry of Finance: https://www.mof.go.jp/english/policy/international_policy/amlcftcpf/4.international_ei.html

Sources

• https://www.binance.com/en/square/post/302157747921345
• https://www.mexc.com/news/1019699
• https://beincrypto.com/japan-to-triple-prison-terms-for-unregistered-crypto-sales/
• https://freemanlaw.com/cryptocurrency/japan/
• https://www.fatf-gafi.org/en/countries/detail/Japan.html
• https://www.mof.go.jp/english/policy/international_policy/amlcftcpf/3.efforts.html
• https://www.fsa.go.jp/en/news/2026/20260331/01.pdf
• https://www.npa.go.jp/sosikihanzai/jafic/en/maneron_e/manetop_e.htm
• https://fsa.go.jp
• https://jvcea.or.jp
• https://www.fsa.go.jp/
• https://www.fsa.go.jp/risk/rikinsei/financeact.pdf
• https://www.fatf-gafi.org/
• https://greylabelforex.com/japanese-securities-license/
• https://www.financemagnates.com/institutional-forex/bmo-obtains-securities-license-in-japan/
• https://www.fsa.go.jp/risk/rikinsei/fiea.pdf
• https://www.nta.go.jp/tax/taxsya/12001.htm
• http://link.springer.com/10.1007/978-1-349-12588-3_5
• https://www.japan.go.jp/japan/
• https://www.ssrn.com/abstract=4341349
• https://www.fsa.go.jp/inter/etc/20220914-2/02.pdf
• https://www.plasma.to/learn/tools/stablecoin-regulation-map/japan
• https://blockworks.co/news/japan-passes-legal-framework-for-stablecoins
• https://www.sygna.io/blog/japan-implements-fatfs-crypto-travel-rule/
• https://www.fsa.go.jp/en/news/2025/20250625/01.pdf
• https://www.mof.go.jp/english/policy/international_policy/amlcftcpf/4.international_ei.html