Remote VASP serving residents in Japan
Foreign-incorporated entity that offers exchange, custody, or transfer services to residents of a jurisdiction without establishing a local entity or office.
Remote VASP is conditionally permitted in Japan with a local entity, subject to AML obligations and high licensing burden.
Verdict Details
- Permitted
- conditional
- Local entity required
- Yes
- Licensing burden
- High
- Last updated
- 2026-07-13
AML Obligations
- Full KYC/CDD procedures required under PSA and FIEA — aligned with FATF recommendations
- Suspicious Activity Reporting (SAR) obligations to FSA
- Transaction monitoring obligations for all crypto-asset exchange services
- Travel Rule applies with zero-threshold (JPY 0) — originator and beneficiary information must be transmitted for all transfers
- No de minimis threshold for AML obligations — all transactions covered
Key Restrictions
- Must be registered as a VASP (Crypto-Asset Exchange Service Provider) with the FSA — CAESP registration
- Must incorporate a local entity in Japan — no provision for foreign-entity licensing; a Japanese-registered entity is required
- Must hold minimum capital of JPY 10M (~$70K USD) and maintain positive net assets
- Mandatory JVCEA (self-regulatory organization) membership
- 100% cold storage recommended for customer assets; customer asset segregation required (trust account or equivalent)
- Token listings must be pre-screened by JVCEA (green/white list)
- Margin trading capped at 2x leverage
- 6–18 month application timeline for licensing
Key Risks
- Enforcement risk is significant — FSA has power to issue administrative orders, impose penalties, and revoke licenses for unregistered operation
- Operating without a license (unlicensed remote VASP) is illegal and exposes the operator to enforcement action, cease-and-desist orders, and potential criminal liability
- FSA actively monitors for unregistered cross-border services and has taken enforcement actions against foreign exchanges (e.g., Binance warning in 2021, 2023)
- The zero-threshold Travel Rule imposes compliance costs on every transaction, including foreign-to-Japan transfers
- Tax reporting obligations to the National Tax Agency (NTA) also apply, creating dual regulatory exposure
Evidence
This verdict synthesizes the following facts. Each fact links to its primary source(s).
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.
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.
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.
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.
Evidence fact jp.licensing.core-requirements-for-licensed-exchanges not found (may have been renamed).
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).
Japan's crypto-asset travel rule, in force since 1 June 2023, is APTCP Article 10-5: a crypto-asset exchange service provider transferring crypto-assets at a customer's request to another provider must notify originator and beneficiary identification information; the article sets no monetary threshold, and the duty applies only to providers in jurisdictions with an equivalent rule — 58 jurisdictions, with Anguilla, Oman, Cuba, Dominica and Botswana being added in 2026.
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
Regulator: Financial Services Agency (FSA).
Regulator: National Tax Agency (NTA).
Verdict Attribution
- Source:
- AI-Generated · Unreviewed
- AI synthesized:
- 2026-07-13 (deepseek-chat)
- Last updated:
- 2026-07-13
- Confidence:
- high
This verdict was produced by an AI model from the underlying facts. Confirm with counsel before relying on it for material decisions.
Conditional — a remote VASP cannot serve Japanese residents from abroad without a local entity; it must incorporate in Japan, obtain CAESP registration from the FSA, join JVCEA, meet capital/security/AML requirements, and comply with a zero-threshold Travel Rule; unlicensed cross-border operation carries substantial enforcement risk.
Questions this verdict aims to answer
- May a non-resident provider serve residents from abroad?
- Does cross-border service trigger licensing, registration, or AML obligations?
- What enforcement risk exists for unlicensed remote operators?