Is Crypto Legal in Japan?

The FSA (with Local Finance Bureaus) registers and supervises crypto-asset exchange service providers (PSA Art. 63-2) and EPI exchange service providers (Art. 62-3), and drafted Law No. 64 of 2026, which moves crypto-asset trading to the FIEA; that law’s crypto provisions are not yet in force.

JVCEA is the certified association under PSA Art. 87, but membership is not mandatory: an applicant may instead adopt equivalent internal rules (PSA Art. 63-5(1)(vi)). New tokens require prior notification to the JVCEA, which may object (Rule on Handling of Crypto-Assets Art. 5); it also audits and sanctions members.

The Payment Services Act (Act No. 59 of 2009) crypto regime of registration, customer verification and asset segregation took effect in April 2017; a 2019 amendment in force May 2020 made changes to handled crypto-assets subject to prior notice, added advertising rules and required user crypto to be held in cold wallets in principle.

The 2019 FIEA and PSA amendment (in force May 2020) brought security tokens and crypto-asset derivatives under the FIEA; Law No. 64 of 2026, promulgated 23 Jul 2026, moves crypto-asset trading regulation from the PSA to the FIEA, but its crypto provisions take effect on a date set by cabinet order within one year of promulgation and are not yet in force.

The 2022 Payment Services Act amendment (enacted 3 Jun 2022, in force 1 Jun 2023) created electronic payment instruments (Art. 2(5)), issued by banks, trust companies and fund transfer service providers, and a registration regime for EPI exchange service providers (Art. 62-3).

Crypto-asset exchange service providers register under PSA Art. 63-2 with capital of at least ¥10 million and non-negative net assets (CAESP Ordinance Art. 9). Cold storage is mandatory except a 5% hot-wallet cap (Art. 27(2)). JVCEA membership is optional if equivalent internal rules are adopted (PSA Art. 63-5(1)(vi)); new tokens need prior notice to the JVCEA.

Custody of crypto-assets for others (PSA Art. 2(15)(iv)) is crypto-asset exchange business requiring Art. 63-2 registration. User money must be entrusted to a trust company (Art. 63-11(1)); user crypto must be segregated and held by the cold method, with hot-wallet holdings capped at 5% (CAESP Ordinance Art. 27), and segregation is audited by a CPA or audit firm (Art. 63-11(3)).

Crypto-asset exchange business requires Payment Services Act Art. 63-2 registration; individual margin must be at least 50% of the position, i.e. 2x maximum leverage (CAESP Ordinance Art. 25(5)(i)). Dealing in or intermediating stablecoins requires registration as an electronic payment instrument exchange service provider (PSA Arts. 2(10), 62-3); the FSA listed 2 as of 27 Aug 2026.

All crypto-asset exchange service providers (暗号資産交換業者, CAESPs) must be registered with the Prime Minister under Payment Services Act Art. 63-2; the PSA regime is a registration, not a licence, and the FSA register listed 27 registered providers as of 1 Sep 2026.

The Payment Services Act lets the regulator demand reports and inspect crypto-asset exchange service providers (Art. 63-15), issue business improvement orders (Art. 63-16), and revoke registration or suspend business for up to six months (Art. 63-17); e.g. the Kanto Local Finance Bureau ordered DMM Bitcoin on 26 Sep 2024 and CoinBest on 14 Jun 2024.

Following a Financial System Council working group report of 10 Dec 2025, the FSA's FIEA and PSA amendment bill became Law No. 64 of 2026 (promulgated 23 Jul 2026), moving crypto-asset trading regulation to the FIEA; only its higher penalties for unregistered business and SESC investigation powers are in force (from 12 Aug 2026).

Payment Services Act Art. 2(14) defines crypto-assets as electronically recorded property values usable for payment to unspecified persons and tradeable with unspecified persons, or exchangeable for such values, transferable electronically; fiat, currency-denominated assets, electronic payment instruments and FIEA electronically recorded transferable rights are excluded.

Crypto-asset exchange business under Payment Services Act Art. 2(15) covers buying, selling or exchanging crypto-assets, intermediating, brokering or acting as agent for these, managing user money in connection with them, and custody of crypto-assets for others; it requires registration with the Prime Minister (Art. 63-2), not a licence.

Crypto-asset exchange service providers must hold users' crypto-assets separately from their own so each user's holding is immediately identifiable (CAESP Ordinance Art. 27(1)), keep them in cold storage except a hot-wallet portion capped at 5%, and hold their own crypto of the same kind and amount against hot-wallet user crypto (PSA Art. 63-11-2).

Crypto-asset exchange service providers are specified business operators under the Act on Prevention of Transfer of Criminal Proceeds (Act No. 22 of 2007, Art. 2(2)(xxxii)); they must conduct customer verification (Art. 4), file suspicious transaction reports (Art. 8), and notify originator and beneficiary information to the receiving provider on customer crypto transfers to other providers (Art. 10-5).

A crypto-asset exchange service provider must have capital of at least ¥10 million and non-negative net assets (for custodians, net assets at least the yen value of the crypto it holds as performance-guarantee crypto) under CAESP Ordinance Art. 9, and adequate systems to carry on the business, or registration is refused (PSA Art. 63-5(1)(iii)-(v)).

Payment Services Act Art. 63-10 and the CAESP Ordinance Arts. 21-22 require a crypto-asset exchange service provider to explain in advance that crypto-assets are not legal tender and may lose value, and to disclose fees, the provider's registration number, the trust company holding user money, and a complaints contact and dispute-resolution body.

Registration as a crypto-asset exchange service provider is refused if the applicant lacks systems to carry on the business properly or to comply with the PSA, or has a director who is bankrupt or sentenced within five years (PSA Art. 63-5(1)(iv), (v), (xii)); providers must adopt internal rules and train staff (CAESP Ordinance Art. 24).

FIEA Art. 2(3) defines electronically recorded transferable rights (電子記録移転権利) as deemed-securities rights represented by electronically transferable property values and treats them as Paragraph 1 securities for offering rules; Payment Services Act Art. 2(14) excludes them from crypto-assets.

Dealing in, brokering or underwriting security tokens (electronically recorded transferable rights) is Type I Financial Instruments Business under FIEA Art. 28(1)(i), which keeps these rights in Type I while other deemed securities fall under Type II.

Crypto-asset exchange service providers' advertisements must state the provider's name, registration number and that crypto-assets are not legal tender (PSA Art. 63-9-2); false or misleading representations and representations encouraging purely speculative trading are prohibited (Art. 63-9-3).

FIEA Arts. 185-22 to 185-24 prohibit fraudulent practices, spreading rumours and market manipulation in crypto-asset trading and crypto derivatives. Japan has no crypto insider-trading rule yet; Law No. 64 of 2026 adds one, but its crypto provisions are not yet in force.

Crypto-assets are financial instruments under FIEA Art. 2(24)(iii-2), so crypto-asset derivatives are regulated under the FIEA (2019 amendment, in force May 2020); carrying on over-the-counter derivatives business, including crypto-asset derivatives, is Type I Financial Instruments Business (FIEA Art. 28(1)(ii)).

Stablecoins are regulated in Japan as electronic payment instruments (電子決済手段) under Payment Services Act Art. 2(5), introduced by the 2022 amendment in force from 1 Jun 2023.

Under the 2022 Payment Services Act amendment, electronic payment instruments are issued by banks, trust companies (trust type, Art. 2(9)) and fund transfer service providers; JPYC Inc., registered as a fund transfer service provider on 18 Aug 2025 (Kanto LFB No. 00099), began issuing the yen stablecoin JPYC on 27 Oct 2025.

Payment Services Act Art. 2(5) limits electronic payment instruments to currency-denominated assets (通貨建資産, assets denominated in or repaid in yen or a foreign currency, Art. 2(7)) usable for payment and transferable electronically; for trust-type instruments (Art. 2(9)), the EPI Ordinance Art. 3 requires at least 50% of trust money in demand deposits.

Intermediating the sale or exchange of electronic payment instruments is EPI exchange business (Payment Services Act Art. 2(10)(ii)) requiring registration under Art. 62-3, not fund transfer registration. From 1 Jun 2026 the 2025 PSA amendment also created a separate EPI and crypto-asset service intermediary business (電子決済手段・暗号資産サービス仲介業).

The Japan Virtual and Crypto assets Exchange Association (JVCEA) states that it is the certified payment service provider association under the Payment Services Act (認定資金決済事業者協会, certified by the Prime Minister under Art. 87) and the certified financial instruments firms association under the FIEA.

JVCEA membership is not a statutory condition of registration: PSA Art. 63-5(1)(vi) refuses registration only to an applicant that neither joins the certified association nor adopts equivalent internal rules and the systems to comply with them.

As the certified association, the JVCEA makes self-regulatory rules for its members (PSA Art. 88(iii)): basic rules plus separate rule sets for crypto-asset exchange, crypto derivatives, EPI exchange, fund transfer and intermediation, including the Rule on Handling of Crypto-Assets (enacted 30 Jul 2018, amended 29 Nov 2024).

The JVCEA audits and monitors its members and issues guidance, recommendations and sanctions under its own disciplinary rules; PSA Art. 88 charges a certified association with investigating members' compliance with the law and its rules.

The FSA outline of the 2022 Payment Services Act amendment (enacted 3 Jun 2022, in force 1 Jun 2023) names banks and trust companies as issuers of electronic payment instruments, and makes intermediaries that increase or decrease bank deposit claims on a bank’s behalf subject to Deposit Insurance Corporation reporting and inspection.

Fund transfer service providers, which issue yen stablecoins such as JPYC, must secure their outstanding obligations by a performance-guarantee deposit with a deposit office (PSA Art. 43), which may be replaced by a guarantee contract with a bank or other eligible guarantor (Art. 44) or a trust contract holding money, deposits or JGBs and other designated bonds (Art. 45).

For trust-type stablecoins (specified trust beneficial interests, PSA Art. 2(9)), the EPI Ordinance Art. 3 as in force from 1 Jun 2026 requires at least 50% of trust money in demand deposits; for yen-denominated instruments the rest may be held in yen JGBs maturing within three months or term deposits cancellable at any time.

The Payment Services Act vests registration and supervision of crypto-asset exchange service providers in the Prime Minister and delegates it to the FSA Commissioner, who may sub-delegate to Local Finance Bureau directors (Art. 104); the FSA register of 1 Sep 2026 lists 25 providers under the Kanto bureau and 2 under the Kinki bureau.

The Japan Virtual and Crypto assets Exchange Association (一般社団法人日本暗号資産等取引業協会, JVCEA) is the self-regulatory body for crypto-asset exchange, EPI exchange, fund transfer and crypto-asset derivatives business; its rules require members to notify it before handling a new crypto-asset and let it object (Rule on Handling of Crypto-Assets Art. 5).