Cryptoasset Trading Regulation in Japan

Having a reputation of a global innovation hub, Japan occupies leading positions in the field of IT technologies & Fintech. If you’re planning to register a crypto exchange in Japan or interested in the regulation of cryptoasset trading platforms in Japan, you’ll no doubt draw some valuable insights from reading the information below.

Japan: Regulation of Transactions Involving Cryptoassets

Exchanging cryptocurrencies & fiat currencies in the state of Japan must be done via Japan-registered cryptocurrency exchanges. In its turn, establishing a cryptocurrency exchange in Japan requires getting a license & complying with the licensing criteria of the relevant regulators.

Trading in tokens in Japan must be done via crypto exchanges as well. If you intend to open a cryptocurrency exchange in Japan, you should keep in mind that doing so requires adherence to the rules & regulations of the relevant regulators.

Rendering custodial services in Japan (i.e. holding or managing cryptoassets) also requires registering a cryptocurrency exchange in Japan.

Please keep in mind that the new rules for secure storage of cryptoassets in the state of Japan contain the following requirements:

• clients' cryptoassets, with the exception of cryptoassets necessary for meeting daily demand of clients, are to be stored in offline cold wallets;
• if a client's cryptoassets aren’t stored in cold wallets, Japan-registered cryptocurrency exchanges must hold their own cryptoassets of an identical quantity & type in isolated cold wallets.

Pursuant to the new rules, if a cryptocurrency exchange fails, clients are eligible to get preferential payments in respect of their cryptoassets.

Japan: Foreign-Based Cryptoasset Exchanges

Foreign-based cryptoasset exchanges in the state of Japan are regulated as per PSA & FIEA. Under the PSA, foreign-based cryptoasset exchanges that aren't registered as per the PSA are forbidden to attract clients & conduct transactions involving cryptoassets.

Determining whether the above activities qualify or don’t qualify for cryptocurrency exchange services & whether they require registration of a cryptocurrency exchange in Japan will depend on the exact nature of a specific activity.