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:
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.
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.
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.
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.
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.
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.
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.
|Virtual Currency Exchange Provide
|Timeframe for Approval:
|Japan Financial Services Authority
|At least 1 resident director (representative of the local office)
|At least 1 shareholder (natural person or legal entity, no nationality restrictions)
|Local Registered Office:
|Corporate Tax Rate:
|Japan Yen (JPY)
|Minimum Paid-up Capital:
|Gov. App Fee:
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:
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.
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.
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.
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.
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.
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.
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.
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.
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.
(including but not limited to directors, shareholders and beneficial owners)