Crypto Licensing - Japan

About Japan

According to the Payment Services Act, “crypto-assets” are payment mechanisms that are not denominated in fiat money and can be used to pay unnamed individuals. Owning and investing in cryptocurrency is not restricted.

Although exchanges are legal in Japan, the country has prioritised crypto legislation in the aftermath of a number of high-profile security breaches, including the Coincheck heist, which resulted in the theft of $530 million in digital currency.

Japan is an archipelago nation located off the East coast of Asia, consisting of four main islands, from north to south: Hokkaido, Honshu (the largest and most populous), Kyushu, Shikoku, and over 3500 smaller islands. The Ryukyu Islands are the farthest south.

According to Worldometer’s elaboration of the most recent United Nations data, Japan’s current population is 125,377,387 as of Tuesday, May 9, 2023.

Japanese is the first language of 99.2% of Japanese people. Amami, Kyukyu, Kikai, and Miyako are among the few lesser-spoken languages still spoken on the islands.

The current Japanese legal system is founded on civil law and is modelled after 19th century European legal systems, particularly the legal codes of Germany and France. When imperial sovereignty over Japan was reestablished in 1868 as part of the Meiji Restoration, Japan developed its legal system.

Here are some of the advantages of having a crypto licence in Japan:

1. Regulatory authority

Japan is one of the few countries that has enacted specific legislation for cryptocurrency exchanges. Obtaining a cryptocurrency licence in Japan demonstrates conformity with the country’s regulatory regulations, which improves your reputation and develops trust with clients and investors.

2. Investor assurance 

Japan has a sizable bitcoin user base as well as strong investor interest in digital assets. You can attract Japanese investors that prefer to engage with licenced and regulated exchanges if you operate under a crypto licence in Japan. This can aid in the development of credibility and the trust of potential clients.

3. Market entry

Japan has one of the largest cryptocurrency markets in the world. You acquire access to this market and can sell your services to Japanese customers by obtaining a crypto licence. This allows for business growth and expansion as well as exposure to a wide user base.

4. increased security standards

Stringent security standards are part of Japan’s regulatory framework for bitcoin exchanges. Adhering to these standards demonstrates your dedication to protecting consumer assets and preventing hacking and other cybersecurity risks. This can aid in attracting security-conscious clients who place a premium on the security of their digital assets.

5. Compliance with AML and KYC

Strong anti-money laundering (AML) and know-your-customer (KYC) processes are part of Japan’s crypto licence requirements. By putting these protections in place, you are contributing to worldwide efforts to combat criminal activity and financial crimes involving cryptocurrencies. Adherence to AML and KYC criteria can also facilitate the establishment of banking ties and collaboration with financial institutions.

6. Regulatory consistency

For long years, Japan’s regulatory framework for bitcoin exchanges has provided stability and certainty. This stability can be advantageous for organisations seeking long-term planning and operating in an environment governed by well-established norms and regulations. 

7. Possibilities for collaboration

Japan boasts a thriving bitcoin industry and a welcoming ecosystem. By obtaining a crypto license, you open up possibilities for collaboration with other licensed entities, financial institutions, and technology providers in Japan. This can lead to collaborations and synergies that benefit your company and help to its success.


License: Virtual Currency Exchange Provide
Timeframe for Approval: 6 months
Regulator: Japan Financial Services Authority

Company Structure

Local Director: At least 1 resident director (representative of the local office)
Local Shareholder: At least 1 shareholder (natural person or legal entity, no nationality restrictions)
Local Registered Office: Required
Local Staff: Required
Compliance Officer: Required
AML/KYC: Required
Audit: Required
Economic Substance: Required
Corporate Tax Rate: 0%
Currency: Japan Yen (JPY)
Minimum Paid-up Capital: JPY10,000,000
Capital Requirement: EU75,000
Gov. App Fee: EU8,500

Companies registered as Kabushiki Kaisha – the equivalent of an ordinary joint-stock company – can obtain a bitcoin exchange licence in Japan. To obtain a bitcoin exchange licence in Japan, the applicant must:

  • having a positive balance-sheet net worth;
  • have at least 10 million yen in capital
  • work in accordance with the law;
  • create a suitable company structure;
  • meet KYC and AML standards
  • train employees while adhering to the rules and regulations of the country of operation
  • Maintain accounting records.

A company applying for the license shall develop and implement a set of measures aimed at preventing data leakage. To that goal, a functional IT system must be developed. Customers of the company will be aware of the legal status of bitcoin.

Fiat currency and deposit/trust monies must be maintained separately in Japan, and this is a legal necessity. Cryptocurrencies available to the company and its consumers must be properly separated and identified. Respect for this duty will be verified through an independent annual audit.

1. Business planning

You must create a comprehensive business strategy outlining your potential bitcoin exchange operations. This strategy should include information such as the types of cryptocurrencies to be exchanged, trading processes, security measures to be applied, and risk management procedures.

2. Company organisation

You must set up a corporation in Japan that meets the legal criteria and has a registered office there. The corporation must have a enough financial basis, adequate internal controls, and an appropriate corporate governance structure.

3. System of compliance

You must set up a strong compliance structure to prevent money laundering, terrorist financing, and other illegal actions. Know-your-customer (KYC) protocols, customer identification and verification processes, and transaction monitoring systems are all part of this.

4. Security precautions

To protect consumer assets and preserve the integrity of their systems, cryptocurrency exchanges must deploy stringent security procedures. This includes features such as cryptocurrency cold storage, multi-factor authentication, and regular security assessments.

5. Personnel and management

The FSA expects cryptocurrency exchanges to have competent management and people with the requisite financial competence and experience. Background checks on key individuals involved in the transaction may be done.

6. Financial accounting and reporting

In Japan, cryptocurrency exchanges must undergo regular financial audits by certified public accountants. They must also provide the FSA with financial statements and reports at regular intervals.

7. Customer security

Cryptocurrency exchanges are expected to put in place safeguards to secure consumer assets and create a level playing field. This involves keeping client and corporate assets distinct, exposing information about costs and transaction processes, and putting in place systems to manage customer concerns.

8. Monitoring and reporting are ongoing.

Once licenced, Japanese cryptocurrency exchanges must adhere to regular monitoring and reporting regulations. They must report questionable transactions, cooperate with regulatory inspections, and follow market manipulation and insider trading restrictions.

Documents required by all involved individuals

(including but not limited to directors, shareholders and beneficial owners)

  • Passport copy (Notarised)
  • Utility Bill issued within the last 3 months (Notarised)
  • CV or Resume for each involved individual
  • Two professional reference letters
  • Qualifications (Notarised)

For Corporate Shareholders

  • Articles of Association in English
  • Registered office address documents (Notarised)
  • Company Register of director/s
  • Company Register of UBOs (shareholder register, or incumbency certificate, or share certificates)
  1. Formation of international business corporation.
  2. Preparation and drafting of shareholder and officer agreements.
  3. Preparation and drafting of narrative business plan.
  4. Prepare five year financial projections.
  5. Preparation and drafting of current financial statements
  6. Preparation and drafting of personal financial statements for owners.
  7. Identification and draft letters naming principal representative and auditor.
  8. Draft and prepare required bank charter and prospectus
  9. Preparation and drafting application with regulatory authorities.
  10. Respond and draft responses to regulatory authority application inquiries.
  11. Facilitate and consummate bankcard relationship with prepaid card program managers
  12. Preparation and drafting of policy agreements and related documents.
  13. Facilitate and consummate IBAN and correspondent bank relationship
  14. Provide for required physical presence and local director
  15. Preparation and review of client greements, website disclosures and related agreements.