Is crypto legal in Japan? Rules & regulation (2026)

Crypto-asset exchange service providers must be registered with the FSA under the PSA; the 2025 amendment renames and broadens the perimeter (including non-custodial intermediaries) and the 2026 FIEA bill raises unregistered-business penalties from a 3-year to a 10-year maximum sentence and adds SESC investigation powers.

Stablecoins redeemable at par are 'electronic payment instruments' under the PSA; domestic issuance is restricted to banks, trust companies and licensed fund-transfer providers with 100% reserves and on-demand redemption. A June 2026 ordinance opens a qualified path for foreign trust-type stablecoins where the foreign issuer holds an equivalent licence, maintains audited collateral and is supervised by a regulator that can cooperate with the FSA.

CAESPs must segregate client fiat and crypto from house assets, hold at least 95% of customer crypto in cold storage, fully back any hot-wallet holdings with their own corporate assets, and undergo annual segregation audits by a CPA or auditing firm; the FSA plans to add a mandatory liability-reserve requirement via legislation submitted in 2026.

Tokens tied to shares, bonds or fund interests are 'electronic transferable rights' under the FIEA and require a Type I financial instruments licence to handle; pure utility-style ICO tokens fall under the PSA crypto-asset regime. The JSTOA acts as the FSA-recognised self-regulatory body for STOs.

Japan imposes FATF-aligned travel-rule notification obligations on Cryptoasset Exchange Service Providers and Electronic Payment Instruments Service Providers, requiring originator/beneficiary information at the time of crypto and stablecoin transfers.

Crypto gains are currently 'miscellaneous income' taxed at progressive national rates of 5–45% plus 10% inhabitant tax (combined up to ~55%). The 2026 tax-reform proposals introduce a separate flat 20% rate plus three-year loss carry-forward, contingent on the FIEA reclassification and expected to apply to transactions from 1 January 2028.