Self-custodial wallet / non-custodial software in Japan
Publisher of software where users hold their own private keys. The publisher never holds, controls, or has access to user funds.
Self-custodial wallet is permitted in Japan with no licensing burden.
Verdict Details
- Permitted
- yes
- Local entity required
- No
- Licensing burden
- None
- Last updated
- 2026-07-13
Key Restrictions
- Cannot offer any crypto-asset exchange services (buying/selling/exchanging/intermediating/managing/transferring for others) as defined under the Payment Services Act — doing so triggers CAESP registration.
- Must not hold, control, or access user private keys or funds — the non-custodial nature is essential to avoid VASP/MSB classification.
- No stablecoin issuance or intermediation through the software — such activities require bank/trust/fund-transfer licensing under the Stablecoin Law.
Key Risks
- Regulatory ambiguity risk: Japanese regulators (FSA/JVCEA) could re-interpret software distribution as 'management of crypto-assets for others' if the software has centralized features (e.g., hosted key recovery, fee structures tied to transactions).
- Enforcement risk: Unlicensed operators providing wallet services that verge on custodial or intermediation functions face FSA administrative orders, penalties, or criminal referral.
Evidence
This verdict synthesizes the following facts. Each fact links to its primary source(s).
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.
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 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).
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.
Permitted — publishing non-custodial wallet software where the publisher never holds user private keys or funds does not trigger VASP (CAESP) classification under the Payment Services Act, so no licensing or AML obligations attach, provided the software lacks any custody, exchange, or intermediation functions.
Questions this verdict aims to answer
- Does software publishing trigger VASP / MSB classification?
- Do AML obligations attach when no custody exists?
- What disclosure or consumer-protection rules apply?