Overview
Japan was the first country in the world to license crypto exchanges, Chapter III-2 of the Payment Services Act has been in force since 1 April 2017. The regime now runs on four tracks. Core exchange licensing (CAESP) remains under the PSA and is supervised by the JFSA with JVCEA as the self-regulatory body. Stablecoin intermediation (EPISP) has operated under Chapter III-3 since June 2023. A lighter 2025 amendment creates the ECISB intermediary-lite licence from 2026. And on 10 April 2026 the Cabinet approved a landmark FIEA reform reclassifying Bitcoin, Ethereum and other major crypto-assets as financial instruments, to take effect during FY2027 subject to Diet ratification.
Japan is consequently the longest licensing runway in Asia-Pacific but also the most statute-stable. For corporate treasuries holding crypto on balance sheet, Japan's year-end mark-to-market exemptions (introduced for issuers in 2023 and for listed corporates in 2024) are unique in the region.
The regulators. JFSA and JVCEA
The Financial Services Agency of Japan (JFSA) licenses and supervises Crypto-Asset Exchange Service Providers and Electronic Payment Instruments Service Providers. Filings route through the Kanto Local Finance Bureau (Kanto Zaimukyoku) for desk review before JFSA on-site inspection. The Japan Virtual and Crypto Assets Exchange Association (JVCEA) is the mandatory SRO for CAESPs, it maintains the Green List of eligible tokens, sets advertising rules, margin rules and insider-trading standards. For EPISPs the sibling SRO is the Japan Payment Service Providers Association (JPSA). JVCEA pre-consultation is, in practice, the critical path for a new CAESP file.
Track 1. PSA Chapter III-2 · Crypto-Asset Exchange Service Provider (CAESP)
PSA Article 2(15) captures three services: (i) sale, purchase or exchange of crypto-assets, (ii) intermediary, brokerage or agency for (i), and (iii) management of users' money or crypto-assets in connection with (i) or (ii). Any of the three triggers CAESP registration.
Minimum capital
| Metric | Threshold |
|---|---|
| Stated capital | ≥ JPY 10,000,000 |
| Net assets | Must be positive (no negative position) |
Core CAESP obligations
- Cold-storage segregation of user crypto-assets with equivalent own-balance backup.
- Trust-segregation of user fiat deposits at a Japanese trust bank.
- Mandatory JVCEA membership and compliance with its self-regulatory rules.
- Token listing must follow the JVCEA Green List / approval procedure.
- AML/CFT and Travel Rule under the Act on Prevention of Transfer of Criminal Proceeds (in force 1 June 2023), with a JPY 100,000 equivalent threshold.
- Fit-and-proper tests for directors, statutory auditors and senior officers; minimum one representative director resident in Japan.
Track 2. PSA Chapter III-3 · EPISP (stablecoin intermediary)
In force since 1 June 2023, Chapter III-3 regulates intermediation, custody and exchange of Electronic Payment Instruments, i.e., fiat-referenced stablecoins. On the issuance side, only three categories may issue fiat-referenced stablecoins in Japan: licensed banks, Type-II and specified trust companies (trust-type stablecoins), and funds-transfer service providers.
The 6 June 2025 PSA amendment, entering into force by June 2026, permits up to 50% of stablecoin reserves to be held in low-risk assets. JGBs or US Treasuries with ≤3 months residual maturity, or early-termination time deposits, instead of 100% demand-deposit backing. This makes Japan meaningfully more competitive for yen-backed and trust-type stablecoin issuance.
Track 3. ECISB intermediary-lite licence (in force by June 2026)
The 2025 amendment introduces a new lighter licence for firms that only intermediate between users and a principal CAESP or EPISP, for example, fintech apps that do not custody assets. Because ECISBOs do not accept deposits of user property, the 2025 amendment confirms that they are not subject to financial or capital-adequacy requirements. They must register with the FSA and affiliate with a sponsoring CAESP or EPISP that remains liable for their conduct.
For a Japan market entry without custody, ECISB cuts timeline roughly in half, 6 to 12 months projected, versus 15 to 24 months for CAESP. Expect sponsoring-principal selection to become the critical path.
Track 4. FIEA reclassification (Cabinet-approved 10 April 2026)
On 10 April 2026 Japan's Cabinet approved a landmark Financial Instruments and Exchange Act amendment reclassifying Bitcoin, Ethereum, XRP and other crypto-assets as financial instruments, subject to Diet ratification and effective during FY2027. The reform migrates roughly 13 million domestic crypto accounts and about JPY 5 trillion in deposits from PSA to FIEA supervision, introduces insider-trading prohibitions and mandates contingency reserves at exchanges (exact ratio to be set by secondary legislation).
If you are considering Japan in 2026, plan around a two-regime transition. The initial registration remains under PSA Chapter III-2, but during FY2027 your compliance map will shift to FIEA, with insider-trading surveillance, possible reserve obligations and new disclosure duties. Build the operating model that already aligns with FIEA expectations; we help map the migration during application prep.
High-level application checklist (CAESP)
- Incorporate a kabushiki kaisha (KK) or register a branch of a foreign company in Japan.
- Appoint at least one representative director resident in Japan; appoint statutory auditors.
- Evidence stated capital ≥ JPY 10M and positive net assets.
- Build internal compliance, risk-management, AML/CFT and cybersecurity governance on a three-lines-of-defence model.
- Pre-consultation with the Kanto Local Finance Bureau and with JVCEA.
- Cold-storage infrastructure: ≥95% of user assets in cold wallets with equivalent own-balance backup.
- Trust-segregation agreement with a Japanese trust bank for user fiat.
- Token admission plan aligned with the JVCEA Green List process.
- Travel-Rule solution integrated (JPY 100,000 threshold).
- Business plan, three-year financial projections, customer-protection manual, advertising policy.
- File registration with JFSA via the local finance bureau; respond to on-site inspection.
- Apply for JVCEA membership concurrently.
Process and timeline
| Stage | CAESP | EPISP | ECISB (from 2026) |
|---|---|---|---|
| Pre-application preparation | 6–9 months | 6–9 months | 3–4 months |
| JFSA review (LFB desk + on-site) | 9–15 months | 9–15 months | 4–8 months |
| JVCEA / JPSA vetting (parallel) | parallel | parallel | parallel |
| Typical total | 15–24 months | 15–24 months | 6–12 months |
No official SLA is published. 2024–2026 market observation is that new CAESP registrations typically take 18 to 24 months end-to-end, the longest licensing runway in Asia.
Licence fees and cost of compliance
The statutory government charge for CAESP registration is modest: a JPY 150,000 registration and licence tax (tōrokumenkyōzei) payable to the Kanto Local Finance Bureau at the moment of registration, with no separate JFSA administration fee. After registration, the JFSA assesses annual supervisory levies on licensees under the general FSA supervisory-fee regime; the levy is calculated against each firm's share of regulated financial activity and is published in the FSA's annual supervisory-cost report.
The real cost of a Japan CAESP is the build-out, not the filing. Market experience across 2024 to 2026 is an all-in envelope of roughly USD 500,000 to USD 1,000,000 from Day 0 to registration, covering Japanese counsel and tax advisers, the governance and three-lines-of-defence build, cold-storage infrastructure and external audit, JVCEA pre-consultation, trust-bank negotiation, Travel Rule tooling, 18 to 24 months of staff runway, and the post-registration shadow-operation period that JFSA inspectors observe before full go-live. Sponsoring a JVCEA membership and maintaining the compliance function represents the steady-state recurring cost.
How many CAESPs are licensed in Japan today
As of April 2026, approximately 30 Crypto-Asset Exchange Service Providers are registered with the JFSA. The register includes bitFlyer, Coincheck, bitbank, GMO Coin, SBI VC Trade, DMM Bitcoin, Rakuten Wallet, Mercoin and roughly two dozen others. The authoritative list is maintained by the JFSA and published monthly in English; the Japanese-language version at fsa.go.jp is refreshed on the same cadence. EPISP stablecoin intermediaries are a separate, much smaller list that only began filling up after the June 2023 Chapter III-3 commencement.
Japan's register is visibly stable, typically one or two new CAESPs register per year, with withdrawals and consolidations in the opposite direction. The ECISB intermediary-lite licence from 2026 is expected to meaningfully broaden the register because non-custodial fintech apps can enter without the full CAESP burden.
2026 liability-reserve reform
In November 2025 the JFSA announced that every licensed crypto exchange will be required to hold dedicated liability reserves designed to compensate users immediately in the event of a hack, internal fraud, operational error or unauthorised withdrawal. The amendment is scheduled for the 2026 ordinary Diet session and runs alongside the FIEA reclassification package. Precise reserve ratios, permissible reserve assets and segregation rules will be set in secondary legislation; the policy direction is already clear from the FSA's discussion paper.
For applicants filing in 2026, this matters operationally: reserve obligations will sit on top of the existing cold-storage and trust-segregation architecture rather than replace it, and governance documents should anticipate a discrete reserve-management function. New CAESPs we advise in 2026 are being built to that model from the outset, on the assumption that retrofitting after commencement is costlier than designing for it now.
Taxation
- Effective corporate rate ≈ 30–31% for large companies (23.2% national plus local enterprise and inhabitants taxes). SMEs face a reduced bracket on the first JPY 8M of income.
- Japanese Consumption Tax (JCT): 10%. Crypto-asset sales and exchanges are exempt from JCT since the July 2017 amendment.
- Corporate-treasury exemption: since the 2023 reform, issuers' own-held tokens are exempt from year-end mark-to-market; the 2024 reform extended the exemption to listed corporates holding third-party crypto-assets for non-trading purposes.
- Individual tax on crypto gains: miscellaneous income, progressive up to 55% national + local. Reform to a 20% flat separate-taxation rate is under Diet discussion but not enacted as of April 2026.
FAQ
Why does Japan take 15–24 months when other regimes are shorter?
Two reasons. First, JVCEA pre-consultation and Green-List token admission is its own workstream and sits on the critical path. Second, JFSA on-site inspections are substantive: cold-storage architecture, trust-segregation flows and operational three-lines-of-defence are audited, not just reviewed on paper.
Is Japan really a good corporate-treasury jurisdiction?
Yes. Japan is currently the only APAC jurisdiction where listed corporates can hold third-party crypto-assets for non-trading purposes without year-end mark-to-market tax. For corporate Bitcoin-on-balance-sheet strategies this is a material advantage over Singapore and Hong Kong.
Can I use a non-Japanese parent and a Japanese subsidiary?
Yes, the typical structure is a foreign parent with a Japanese KK or registered branch as the licensee. Governance, representative director residency and capital sit at the licensee level. Most international exchanges use this model.
When will the FIEA reclassification actually affect me?
Not immediately. The 10 April 2026 Cabinet approval still needs Diet ratification, then enters into force during FY2027. In practice new licensees in 2026 should design governance, surveillance and reserve models that anticipate the FIEA migration, retrofitting after approval is costlier than building for it now.
How does Japan compare with Korea and Hong Kong?
Hong Kong is faster and institutionally oriented (SFC VATP, 9–18 months). Korea requires the real-name banking arrangement that is the actual bottleneck (FSC VASP). Japan is the slowest but the most statute-stable and most friendly for corporate treasuries.
What are the JVCEA self-regulatory rules and token whitelisting process?
JVCEA membership is mandatory for every CAESP. The SRO sets binding rules on advertising, margin, insider trading and token listings. Any new token must clear the JVCEA Green List approval procedure, market observation is around a 30-day review cycle for standard listings, with the list holding roughly 70 tokens as of 2025. Pre-consultation in Japanese is typically the real critical path for a new file.
What are Japan's cold-storage requirements for CAESPs?
At least 95% of user crypto-assets must be held in cold wallets, segregated from the exchange's own assets, with an equivalent own-balance backup so that hot-wallet exposure is fully covered. User fiat deposits must sit in trust-segregation at a Japanese trust bank. JFSA audits the cold-storage architecture during on-site inspection, paper policy alone is not accepted.
What compliance staffing does a Japan CAESP need?
CAESPs must stand up a three-lines-of-defence governance model: dedicated compliance, risk-management, AML/CFT and cybersecurity functions plus statutory auditors (kansayaku). Directors, statutory auditors and senior officers must pass fit-and-proper tests, and at least one representative director must be resident in Japan. JFSA reviews each senior hire substantively.
What is the JFSA timeline for a CAESP registration?
6–9 months of pre-application preparation (entity, governance, JVCEA pre-consultation, cold-storage audit), plus 9–15 months of JFSA review via the Kanto Local Finance Bureau desk review and on-site inspection. JVCEA vetting runs in parallel. Typical total end-to-end is 15–24 months, no official SLA is published.
How are stablecoins regulated in Japan under PSA and the Banking Act?
Only three categories may issue fiat-referenced stablecoins: licensed banks (under the Banking Act), Type-II and specified trust companies (trust-type stablecoins), and funds-transfer service providers. Intermediation is licensed separately as EPISP under PSA Chapter III-3 (in force 1 June 2023). The 6 June 2025 amendment (in force by June 2026) allows up to 50% of reserves in JGBs or US Treasuries of ≤3 months residual maturity, instead of 100% demand-deposit backing.
Can a foreign exchange use a KK or GK for the licence?
The licensee must be either a Japanese kabushiki kaisha (KK) or a registered branch of a foreign company. Godo kaisha (GK) is not used for CAESP. KK is the standard. A foreign parent plus a Japanese KK subsidiary is the typical structure; governance, representative director residency, JPY 10M stated capital and positive net assets all sit at the Japanese licensee level.
How are AML/CFT and the Travel Rule implemented in Japan?
The amended Act on Prevention of Transfer of Criminal Proceeds has been in force since 1 June 2023. Originator and beneficiary information must be transmitted for crypto transfers at or above a JPY 100,000 (or USD equivalent) threshold. CAESPs must integrate a Travel-Rule solution, run sanctions screening, and file suspicious transaction reports. JVCEA rules supplement the statutory baseline.
PSA crypto licence vs FIEA security-token licence, what's the difference?
Today, PSA Chapter III-2 governs payment-type and utility crypto-assets (CAESP), while FIEA governs investment-type / security tokens (Type-I Financial Instruments Business). The 10 April 2026 Cabinet-approved reform will migrate Bitcoin, Ethereum, XRP and other major crypto-assets from PSA to FIEA during FY2027, layering insider-trading prohibitions and mandated contingency reserves on top of the existing CAESP baseline.
What are the renewal and annual obligations for a Japan CAESP?
CAESP registration does not expire, but licensees face continuous obligations: periodic reporting to JFSA via the Kanto Local Finance Bureau, annual business reports, externally audited financials, ongoing JVCEA compliance and readiness for JFSA on-site inspection. Supervisory levies are assessed annually under the FSA supervisory-fee regime; any change in directors, capital or business scope requires prior notification.
How many crypto exchanges are licensed in Japan?
Approximately 30 Crypto-Asset Exchange Service Providers are registered with the JFSA as of April 2026. The list is updated monthly and includes bitFlyer, Coincheck, bitbank, GMO Coin, SBI VC Trade, DMM Bitcoin and around two dozen others. EPISP stablecoin intermediaries sit on a separate, much smaller register that only started filling after Chapter III-3 commenced on 1 June 2023.
What does a Japan CAESP licence cost beyond the JPY 10M capital?
The statutory registration and licence tax is JPY 150,000, paid to the Kanto Local Finance Bureau at registration. There is no separate JFSA administration fee. Post-registration supervisory levies are assessed annually. All-in market cost, counsel, audit, JVCEA navigation, cold-storage build and 18 to 24 months of runway, is typically USD 500,000 to USD 1,000,000.
What are the penalties for operating a crypto exchange without a CAESP licence?
Unregistered crypto-asset exchange activity is a criminal offence under the Payment Services Act. The 2026 FIEA reclassification package tightens sanctions further, headline penalties discussed reach up to ten years of imprisonment and fines up to JPY 10 million for individuals, with higher corporate fines. The JFSA also publishes enforcement notices against unregistered offshore operators soliciting Japan residents.
What is the 2026 liability-reserve reform?
In November 2025 the JFSA announced that every licensed CAESP must hold dedicated liability reserves that pay users immediately in the event of a hack, fraud, operational error or unauthorised withdrawal. The amendment is scheduled for the 2026 ordinary Diet session and runs in parallel with the FIEA reclassification. The exact ratio and reserve base will be set by secondary legislation.
Official sources
- Financial Services Agency of Japan (JFSA), primary regulator for CAESP and EPISP.
- JFSA crypto-asset registration portal. CAESP registrant list and supervisory guidelines.
- JFSA policy hub. Payment Services Act & Banking Act, statute texts and amendment notices.
- Japan Virtual and Crypto Assets Exchange Association (JVCEA), self-regulatory organisation, Green List, token-listing rules.
- National Tax Agency (NTA), corporate tax, consumption tax and crypto-asset taxation guidance.
- Ministry of Justice of Japan. Companies Act and registered-branch requirements for KK licensees.
- FATF. Travel Rule and AML/CFT standards underlying Japan's 2023 implementation.