Crypto-asset regulation in Japan: the Payment Services Act and the FSA

Overview for education, not legal advice. Rules change — check the official sources. Last reviewed 20 October 2026.

An early registration regime

Japan was among the first countries to create a dedicated regulatory regime for crypto exchanges. The background was the 2014 collapse of Mt. Gox, a large exchange based in Tokyo, which lost a very large number of customers' coins. Amendments to the Payment Services Act that took effect in April 2017 required businesses exchanging what the law then called "virtual currency" to register with the Financial Services Agency (FSA), meet minimum financial and organisational standards, keep customers' assets separate from their own, and verify customers' identities.

Tightening after incidents

In January 2018 a major Japanese exchange suffered a theft of tokens worth a very large amount, which led the FSA to inspect many exchanges and issue business improvement orders. Further amendments, which took effect in 2020, made several changes:

• the legal term changed from "virtual currency" to "crypto-asset";
• exchange service providers must keep most customer crypto-assets in offline storage ("cold wallets") and hold matching assets to cover any kept online;
• misleading advertising and solicitation that encourages speculation were prohibited;
• crypto-asset derivatives and tokens representing financial rights (security tokens) were brought under the Financial Instruments and Exchange Act.

Self-regulation

The Japan Virtual and Crypto assets Exchange Association (JVCEA) was certified by the FSA in 2018 as a self-regulatory organisation. Registered exchange service providers are expected to be members. The association sets detailed rules, for example on how providers assess a token before offering it to customers, and on internal controls.

Stablecoins

Amendments adopted in 2022 and effective from June 2023 created a framework for stablecoins pegged to a fiat currency, which the law treats as electronic payment instruments. Only banks, registered fund transfer service providers and trust companies may issue them, and businesses that intermediate them — for example by exchanging or transferring them for customers — must register with the FSA.

The travel rule

Since June 2023, amendments to the Act on Prevention of Transfer of Criminal Proceeds have required crypto-asset exchange service providers to send information about originators and beneficiaries when transferring crypto-assets to other providers, in line with FATF standards.

Ongoing review

The FSA has examined whether crypto-assets should be regulated more like financial instruments, including the introduction of rules against insider dealing. Any such change requires legislation, so check the FSA's English-language pages for the current position.

Timeline at a glance

• 2014 — collapse of the Mt. Gox exchange in Tokyo.
• April 2017 — registration of exchange service providers under the Payment Services Act begins.
• January 2018 — a major exchange hack leads to FSA inspections and business improvement orders.
• 2018 — the JVCEA is certified as a self-regulatory organisation.
• 2020 — amendments rename virtual currency "crypto-assets", tighten custody and advertising rules and extend securities law to security tokens and derivatives.
• June 2023 — the stablecoin framework and the travel rule take effect.

How Japan compares

Japan's regime is older than most and was shaped by two large failures, which explains its emphasis on custody: the requirement to keep most customer crypto-assets offline is unusually specific. Its stablecoin rules resemble the EU's approach to e-money tokens in one respect — both limit issuance of fiat-referenced tokens to regulated financial institutions — although the legal categories and details differ. Unlike the UK or Singapore, Japan relies heavily on a certified industry association to set detailed operating rules under FSA oversight.

Terms you will meet in Japanese sources

• Crypto-asset exchange service provider — the registered business category for exchanging, intermediating and managing crypto-assets for customers.
• Electronic payment instrument — the legal category used for fiat-referenced stablecoins.
• Business improvement order — a formal FSA instruction to fix problems in a registered firm's operations.

English translations of laws on the Japanese Law Translation database are for reference; the Japanese text is the authoritative version.

What registration requires in practice

Registered crypto-asset exchange service providers must meet minimum financial requirements, keep customers' money and crypto-assets separate from their own, and have that separation checked by external auditors. They must explain the nature of crypto-assets, the risks and their fees to customers, verify customers' identities and report suspicious transactions. The FSA can inspect them, issue business improvement orders and, in serious cases, suspend or cancel their registration.

The advertising rules introduced in 2020 matter for anyone reading crypto marketing aimed at people in Japan. Registered firms may not make false or misleading statements, and may not advertise or solicit in a way that encourages speculative trading. The JVCEA adds detailed self-regulatory rules on how risks and fees must be presented. Promotions from overseas firms that are not registered in Japan are a recurring subject of FSA warnings, so the absence of a registration should be treated as a clear warning sign.

Overview for education, not legal advice. Rules change — check the official sources. Last reviewed 20 October 2026. Nothing here is an offer or a recommendation to use any crypto-asset service.