MSTR Cat

Crypto Law/Level III · Tokens and securities law/3.3 Europe and beyond/Lesson 5

Japan’s Payment Services Act

How Japan became one of the first countries to license crypto exchanges, what its cold-wallet and segregation rules require, and why crypto is moving into the Financial Instruments and Exchange Act after the July 2026 amendment.

Education, not legal, tax or investment advice. Crypto law differs between countries and states and changes often. Check the current rules where you live with a qualified lawyer or tax adviser before you act.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. Individuals holding crypto in Japan need no registration; the cheapest safe venue is an exchange on the FSA’s registered list, where at least 95% of customer crypto must sit offline and be segregated. Gains remain taxable under Japanese income tax.
  2. A foreign platform’s lowest-cost lawful option is not to serve residents of Japan; the test is where customers are, and unregistered exchange business carries up to three years’ imprisonment, a fine of up to 3 million yen, or both (Article 107).
  3. Builders listing a token can reach Japanese users through an already-registered exchange instead of registering themselves; the exchange must name each crypto-asset it handles, so listing depends on its review and the JVCEA’s self-regulatory screening.
  4. Plan for the July 2026 amendment moving crypto under the Financial Instruments and Exchange Act once a Cabinet Order sets the date, within one year of promulgation; disclosure duties and higher exchange capital are expected, with final figures set by implementing orders.

MaterialsThe Payment Services Act (Act No. 59 of 2009), Articles 63-2, 63-11 and 107, on Japan’s e-Gov law databaseThe FSA’s list of registered crypto-asset exchange service providers (kasoutuka.pdf)The FSA’s English overview of the Working Group on Crypto-asset Systems report (published in Japanese on 10 December 2025)

Wonder

  1. Can a foreign exchange serve customers in Japan without registering?
  2. Why do Japanese exchanges keep almost all customer crypto offline?
  3. What changes when crypto moves from the Payment Services Act to securities-style law?

Explore

  1. Japan regulates crypto exchanges through the Payment Services Act (Act No. 59 of 2009), which deals with payment methods rather than securities. An amending act of 3 June 2016 (Act No. 62 of 2016) created a registration system for what it called virtual currency exchange business, in effect from April 2017, which made Japan one of the first countries to license exchanges. Article 63-2 now states that crypto-asset exchange business may be carried on only by a person registered with the Prime Minister; in practice the Financial Services Agency (FSA) and local finance bureaus handle registration. The application must name the crypto-assets handled, and a foreign exchange must name a representative in Japan.
  2. The registration regime was tested early. In January 2018 the Tokyo exchange Coincheck lost about 500 million NEM tokens, then worth roughly $530 million, to hackers; the FSA ordered improvements, and two industry groups merged into a self-regulatory organisation. The FSA now names the Japan Virtual and Crypto Assets Exchange Association (JVCEA) as the accredited body. An amending act of 7 June 2019 (Act No. 28 of 2019) replaced the term ‘virtual currency’ with ‘crypto-asset’ and brought businesses that only manage crypto-assets for others, meaning custody, into the registration requirement. Currency-denominated stablecoins sit in a separate category, ‘electronic payment instruments’.
  3. Custody rules are strict and mechanical. Article 63-11 requires an exchange to hold customers’ money in trust with a trust company or similar institution, to keep customers’ crypto-assets separate from its own, and to have this segregation audited regularly by a certified public accountant or audit firm. The Cabinet Office Ordinance on Crypto-Asset Exchange Service Providers limits crypto-assets kept by any other method to the minimum needed, capped at 5% of the yen value of customer crypto-assets. The rest must be kept with the keys recorded on devices or media not constantly connected to the internet. Under Article 63-11-2, the exchange must also hold its own crypto-assets equal to the online amount.
  4. Penalties are criminal. Under Article 107 of the Act, carrying on crypto-asset exchange business without registration is punishable by imprisonment of up to three years, a fine of up to 3 million yen, or both; the same penalty applies to unregistered businesses dealing in electronic payment instruments. The FSA’s 2025 working group reported numerous inquiries about fraudulent solicitations and noted that unregistered solicitation currently carries no separate criminal penalty. The FSA’s registered list, dated 30 September 2026, states that listing only confirms that the tokens handled meet the legal definition; it is not a guarantee of value. For a builder, the test is whether you serve residents in Japan, not where your company sits.
  5. Japan is now changing the legal home for crypto. A working group of the Financial System Council reported in December 2025 that crypto-assets should move from the Payment Services Act to the Financial Instruments and Exchange Act (FIEA), classified as financial instruments distinct from securities. It recommended disclosure duties for issuers and exchanges, securities-style regulation for exchanges, crypto insider-trading rules with investigative powers for the Securities and Exchange Surveillance Commission, and heavier penalties for unregistered business. Stablecoins and NFTs that are not crypto-assets under the current Act would stay outside. The working group also proposed raising the minimum capital for exchanges from 10 million yen to 50 million yen.
  6. The bill amending the FIEA and the Payment Services Act was submitted on 10 April 2026 and enacted on 15 July 2026, and it was promulgated as Act No. 64 of 23 July 2026. According to the FSA’s schedule, the crypto provisions take effect on a date set by Cabinet Order within one year of promulgation, and until then the Payment Services Act continues to govern exchanges. Details such as final capital levels depend on implementing orders. A practical check: before serving anyone in Japan, confirm the exchange or service appears on the FSA’s registered list, note which crypto-assets it is registered to handle, and follow the implementing orders as they are published.

Key facts

  • Article 63-2 of Japan’s Payment Services Act permits crypto-asset exchange business only for persons registered with the Prime Minister.
  • Japan’s exchange registration regime was created by Act No. 62 of 2016 and took effect in April 2017.
  • Japan’s Cabinet Office Ordinance caps crypto-assets kept outside offline storage at 5% of the yen value of the customer crypto-assets an exchange manages.
  • Under Article 107 of the Payment Services Act, unregistered crypto-asset exchange business is punishable by up to three years’ imprisonment, a fine of up to 3 million yen, or both.
  • In January 2018 the Japanese exchange Coincheck lost about 500 million NEM tokens, worth roughly $530 million, to hackers.
  • A Japanese act moving crypto-asset regulation from the Payment Services Act to the Financial Instruments and Exchange Act was enacted on 15 July 2026 and promulgated on 23 July 2026.

Exercise nine, six, three, one

9CollectList up to 9 crypto services a person in Japan might use, such as domestic exchanges, foreign exchanges, wallet apps, stablecoins or token sales.
6ClusterSort them into 6 categories: registered crypto-asset exchanges, registered custody services, electronic payment instrument services, foreign platforms without registration, token offerings by issuers, and services whose status you cannot confirm.
3DistillReduce the 6 categories to 3 groups: registered under the Payment Services Act, clearly unregistered, and affected by the move to the Financial Instruments and Exchange Act.
1CrystallizeWrite 1 sentence explaining why Japan’s 5% cap on online customer crypto-assets matters for what a customer can lose in an exchange hack.

Fact check

Dates, figures and claims checked against the published sources listed below.

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