Japan Compliance Report

Generated 2026-10-28

Comprehensive Framework

Regulatory Overview

Regulatory Status: Dedicated crypto/VA legislation, licensing regime, active enforcement
Key Regulator(s): Kanto Local Finance Bureau, Financial System Council, Ministry of Economy
Risk Level: low
Primary Legislation: Act No. 59 of 2009, CAESP Ordinance Art. 9, CAESP Ordinance Art. 27, CAESP Ordinance Art. 25(5, The Payment Services Act lets the regulator demand reports and inspect crypto-as, Payment Services Act Art. 2(14) defines crypto-assets as electronically recorded, Crypto-asset exchange business under Payment Services Act Art. 2(15) covers buyi, Act No. 22 of 2007, Art. 2(2, Payment Services Act Art. 63-10 and the CAESP Ordinance Arts. 21-22 require a cr, CAESP Ordinance Art. 24, Under the 2022 Payment Services Act amendment, electronic payment instruments ar, Payment Services Act Art. 2(5) limits electronic payment instruments to currency, Payment Services Act Art. 2(10, The Payment Services Act vests registration and supervision of crypto-asset exch
Travel Rule: Adopted — Threshold: ,
Tax Reporting: Individuals' crypto-asset gains are currently miscellaneous income taxed at progressive national income-tax rates of 5% to 45% (plus the 2.1% special reconstruction income tax on the income-tax amount) and a flat 10% individual inhabitant tax, so the top marginal rate is about 55%. Law No. 12 of 2026 (promulgated 31 March 2026) enacts 20% separate taxation for specified crypto-assets, applying from 1 January of the year after the FIEA and PSA amending law takes effect. Corporations must value actively traded crypto-assets held at fiscal year-end at market value and include the valuation gain or loss in taxable income.. 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 Crypto-asset exchange business may be carried on only by persons registered with the Prime Minister under Payment Services Act Art. 63-2 (a registration, not a licence); the power is delegated to the FSA Commissioner and in part to Local Finance Bureau directors (Art. 104). The FSA register listed 27 registered providers as of 1 Sep 2026 (25 Kanto, 2 Kinki). Crypto-asset exchange service providers and electronic payment instrument 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)); they must verify customer identity, transaction purpose, occupation or business and beneficial owners at transaction time (Art. 4) and keep verification and transaction records for seven years (Arts. 6-7). Under Payment Services Act Art. 63-11(2) and Cabinet Office Ordinance on Crypto-Asset Exchange Service Providers Art. 27(2)-(3), a crypto-asset exchange service provider must hold users' crypto-assets by a cold method (signing keys kept on devices never connected to the internet, or equivalent), except a hot-wallet portion capped at 5% of the yen value of users' crypto-assets. Payment Services Act Art. 63-11(1) requires a crypto-asset exchange service provider to keep users' money separate from its own and entrust it to a trust company or trust bank; Art. 63-11(2) requires users' crypto-assets to be segregated, and Art. 63-11(3) requires the segregation to be audited periodically by a CPA or audit firm. Strict anti-money laundering (AML) and know-your-customer (KYC) compliance is required
licensing 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.
securities The Financial Services Agency is established by the Act for Establishment of the Financial Services Agency (Act No. 130 of 1998), whose Article 3 gives it the mission of securing financial stability and protecting depositors, insurance policyholders and securities investors; it administers the Financial Instruments and Exchange Act, the Payment Services Act and related statutes. The Securities and Exchange Surveillance Commission is established within the Financial Services Agency (Act for Establishment of the FSA, Article 6) and handles matters assigned to it under the Financial Instruments and Exchange Act, the Act on Prevention of Transfer of Criminal Proceeds and other statutes (Article 8). The Financial Instruments and Exchange Act is the former Securities and Exchange Act (Act No. 25 of 1948), renamed and restructured by Article 3 of the Act Partially Amending the Securities and Exchange Act etc. (Act No. 65 of 2006). Japan is one of the 38 member jurisdictions of the Financial Action Task Force; its AML/CFT obligations for financial institutions and crypto-asset exchange service providers are set by the Act on Prevention of Transfer of Criminal Proceeds (Act No. 22 of 2007). FIEA Article 29 prohibits carrying on financial instruments business without registration with the Prime Minister; dealing in, brokering or underwriting electronically recorded transferable rights (security tokens) is Type I Financial Instruments Business under Article 28(1)(i), which excludes other deemed securities but not those rights. Type I Financial Instruments Business (FIEA Article 28(1)) covers dealing, brokerage and offering-handling of securities other than Article 2(2) deemed securities — electronically recorded transferable rights (security tokens) included — as well as OTC derivative transactions, underwriting and securities custody. Type II Financial Instruments Business (FIEA Article 28(2)) covers the public offering or private placement of certain securities such as investment trust beneficiary interests (Art. 2(8)(vii)), dealing, brokerage and offering-handling of deemed securities under Article 2(2) such as collective investment scheme (partnership) interests, and market derivative transactions not falling within Type I. Investment Advisory and Agency Business (FIEA Article 28(3)) requires registration under Article 29 but carries no minimum-capital requirement, since Article 29-4(1)(iv) applies only to Type I, Type II and investment management business; a firm conducting only this business must instead lodge a ¥5 million business security deposit (Art. 31-2; Enforcement Order Art. 15-12(ii)).
stablecoin Electronic payment instruments are currency-denominated assets (PSA Arts. 2(5), 2(7)); their exchange and custody are regulated under PSA Chapter III-2 (電子決済手段等), including registration of EPI exchange service providers (Art. 62-3). A token that is not a currency-denominated asset cannot be an electronic payment instrument under PSA Art. 2(5)(i); if usable for payment to and tradeable with unspecified persons it is a crypto-asset under Art. 2(14), and dealing in it requires crypto-asset exchange service provider registration (Art. 63-2). Japan's stablecoin regime was enacted by the PSA amendment of 3 Jun 2022 and took effect with its cabinet order, ordinances and supervisory guidelines on 1 Jun 2023; a further PSA amendment enacted 6 Jun 2025 took effect on 1 Jun 2026.
tax Individuals' crypto-asset gains are currently miscellaneous income taxed at progressive national income-tax rates of 5% to 45% (plus the 2.1% special reconstruction income tax on the income-tax amount) and a flat 10% individual inhabitant tax, so the top marginal rate is about 55%. Law No. 12 of 2026 (promulgated 31 March 2026) enacts 20% separate taxation for specified crypto-assets, applying from 1 January of the year after the FIEA and PSA amending law takes effect. Corporations must value actively traded crypto-assets held at fiscal year-end at market value and include the valuation gain or loss in taxable income. Selling crypto for fiat currency
travel rule 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 FATF context via Ministry of Finance: https://www.mof.go.jp/english/policy/international_policy/amlcftcpf/4.international_ei.html Japan implemented the crypto-asset travel rule through amendments to the Enforcement Order of the Act on Prevention of Transfer of Criminal Proceeds, approved by Cabinet on 23 May 2023 and promulgated on 26 May 2023, which took effect on 1 June 2023 and set the requirements for jurisdictions excluded from the notification duty.

Sources

This report is AI-generated from publicly available regulatory sources. Last updated: 2026-10-14. View full profile