Blockchain & Crypto-Assets 2026 Comparisons

The main regulatory body for fintech businesses is the JFSA, including the local finance bureaus to which it has delegated certain aspects of its authority. The JFSA administers the registration system for CAESPs and EPIESPs and oversees their day-to-day operations. In addition, in the event of serious issues, such as violations of laws and regulations by CAESPs or EPIESPs, the JFSA has the authority to independently issue administrative actions, such as business improvement orders. The JFSA’s regulatory and supervisory approach is to enhance user protection while also fostering innovation. In practice, however, regulations have been tightened to protect users in the event of an incident (such as a hacking incident).

The Financial Action Task Force (FATF) has been influential in the development of fintech-related regulations in Japan. For instance, the Guidance for a Risk-based Approach to Crypto-Assets by the Financial Action Task Force (“FATF Guidance”) in June 2015 was the trigger for the introduction of regulations on crypto asset exchanges in Japan.

As a recent reaction to the FATF’s activities, the so-called “FATF Recommendations Response Bill,” which was submitted to the Diet by the Cabinet Secretariat on 26 October 2022, was passed by the Diet on 2 December 2022. The Bill was created in response to the Mutual Evaluation Report published by the FATF on 30 August 2021, which recommended that Japan should revise its laws to strengthen measures against anti-money laundering (AML) and countering the financing of terrorism (CFT) in Japan, including by strengthening asset freezing measures and enhancing measures to deal with crypto assets. In order to strengthen Japan’s AML/CFT measures, six legislative acts, including the Act on Prevention of Transfer of Criminal Proceeds and the Foreign Exchange and Foreign Trade Act, were amended collectively. The amendments entered into force in stages through 1 April 2024. Specifically, the major changes are (i) the introduction of a travel rule for CAESPs and EPIESPs and (ii) the introduction of an obligation for banks, CAESPs and EPIESPs to establish a system for asset freezing measures.

Furthermore, the JFSA proactively contributes to the FATF’s activities; for instance, a senior JFSA official serves as the Co-Chair of the Policy Development Group (PDG).

The JFSA also places importance on the regulations and recommendations of the Bank for International Settlements (BIS) and the International Organisation of Securities Commissions (IOSCO). For example, the JFSA has submitted the Amendment Bill to the Diet, which includes provisions that would subject crypto assets to insider trading regulations, a move considered in line with IOSCO’s recommendations.

Overview of the Regulatory Framework Under the Current PSA

A person who engages in the purchase and sale of crypto-assets as a business is required to be registered as a CAESP under Article 63-2 of the PSA. Only CAESPs are permitted to engage in CAES. The PSA requires a person who provides CAES to be registered with the JFSA. A person who engages in CAES without registration is punishable by confinement punishment (koukin-kei) for a term not exceeding three years or by a fine not exceeding JPY3 million or both under Article 107, Item 5 of the amended PSA.

Definition of “Crypto-Asset”

The term “crypto-asset” is defined in the amended PSA as follows.

• A proprietary value (limited to that recorded on electronic devices or other objects by electronic means and excluding Japanese and other foreign currencies and “currency-denominated assets”– the same applies in the following bullet point) which may be:
1. used to pay an unspecified person the price of any goods, etc, purchased or borrowed or for any services provided;
2. sold to or purchased from an unspecified person; and
3. transferred using an electronic data processing system.
• A proprietary value which may be:
1. exchanged reciprocally for a proprietary value specified in the preceding bullet point with an unspecified person; and
2. transferred using an electronic data processing system.

“Currency-denominated assets” are assets denominated in Japanese yen or another foreign currency. These assets do not fall within the definition of crypto-assets. For example, prepaid e-money cards are usually considered “currency-denominated assets”. If a coin issued by a bank is guaranteed to have a certain value vis-à-vis fiat currency, this coin is unlikely to be deemed a “crypto-asset” but will be considered a “currency-denominated asset” instead.

Definition of “Crypto-Asset Exchange Services”

The term CAES means any of the following acts carried out as a business:

• sale and purchase of crypto-assets or exchange of crypto-assets for other crypto-assets;
• intermediary, brokerage or delegation of the sale, purchase or exchange;
• management of users’ money in connection with these acts; or
• management of crypto-assets for the benefit of another person.

Overview of the Regulatory Framework Under the Amendment Bill of the FIEA

As noted above, under the Amendment Bill of the FIEA, new provisions regarding information disclosure systems, business regulations and unfair trading regulations (including insider trading regulations) related to crypto-assets will be established.

In relation to the information disclosure systems, the Amendment Bill of the FIEA categorises crypto-assets with a centralised administrator (“specified crypto-asset issuer”) as “specified crypto-assets” and distinguishes them from other crypto-assets (including Bitcoin and similar crypto-assets).

Specifically, the Amendment Bill of the FIEA essentially maintains the abovementioned definition of “crypto-assets” under the PSA, while singling out those types of crypto-assets where there is a centralised administrator and information asymmetry between said administrator and users as “specified crypto-assets,” and introducing issuer-based information disclosure regulations similar to those for securities.

“Specified Crypto-Assets” refers to “crypto-assets for which only a specific person has the authority to issue such crypto-assets (including those specified by Cabinet Office Ordinance as being similar thereto)”. Furthermore, a “Specified Crypto-Asset Issuer” refers to “a person who issues or intends to issue Specified Crypto-Assets (with respect to Specified Crypto-Assets specified by a Cabinet Office Ordinance under the preceding paragraph, a person specified by a Cabinet Office Ordinance).”

The Working Group Report indicates a direction to define, via a Cabinet Office Ordinance, that crypto-assets based on permissioned blockchains and those issued based on foundational token standards, such as ERC-20, fall under the category of Specified Crypto-Assets. However, as the actual issuance and operational practices vary widely and individual determinations may be necessary based on the specific roles played by issuers and the actual provision of information to users, the scope of “similar items” in the Cabinet Office Ordinance is expected to be a key point of discussion in the future.

Where a fund (a legal wrapper) is used so that investors invest in a fund that conducts crypto-asset transactions rather than directly engaging in such transactions, the regulatory treatment depends on the specific scheme of the relevant fund.

For example, funds in the form of collective investment schemes that invest in crypto-assets are subject to the same rules and regulations as other investment funds that take the form of a partnership. Therefore, in order to solicit investments, the operator of the fund must register as a Type 2 Financial Instruments Business Operator (FIBO) unless:

• there are no more than 49 non-professional investors with one or more professional investors and notification in connection therewith has been made to the JFSA; or
• the fund delegates its solicitation and marketing activities to a registered Type 2 FIBO.

In order for the fund operator to obtain registration as a Type 2 FIBO, the application must be filed with the relevant Local Finance Bureau and undergo a registration review. Once registered, a Type 2 FIBO is required to maintain a minimum capital of JPY10 million under the FIEA and is also required to adhere to certain codes of conduct that seek to protect the interests of investors, including, but not limited to, the duty of loyalty, the duty of care of a good manager, the suitability rule, disclosure obligations, advertising restrictions and the prohibition against compensating customers for their losses.

The operator of a fund that mainly invests in crypto-assets is not required to register as an investment management business operator, as that registration obligation applies only when an operator mainly invests in securities and derivatives. Note that, under the Amendment Bill of the FIEA, investment management activities involving crypto-assets (in the spot market) as investment targets are expected to fall within the scope of the investment management business regulations under the FIEA.

In addition, investment in crypto-assets by the operator of a fund is not likely to trigger the requirement to register as a CAESP because the trading of crypto-assets for the fund’s own investment purposes is not considered to be the trading of crypto-assets “as a business”, which is one of the requirements for the registration obligation.

Although the PSA does not expressly regulate ICOs, if the issuer itself sells the tokens, such activity is likely to fall within the scope of CAES. In addition, the JVCEA’s “Rules for Selling New Crypto-Assets” (the “ICO Rules”) set out detailed rules governing ICOs.

Under the ICO Rules, there are two types of ICOs which can be described as follows:

(i) an offering where a CAESP issues new tokens and sells such tokens by itself; or

(ii) an offering where a token issuer delegates the sale of newly issued tokens to a CAESP.

In practice, token issuance is often carried out through the method described in (ii) above, which is referred to as an Initial Exchange Offering (IEO).

Generally speaking, under the ICO Rules, the following requirements apply for both types of ICOs:

• maintenance of a system for review of the targeted business that raises funds via ICOs;
• disclosure of information on the token, the token issuer, the targeted business and the like;
• segregated management of funds (both fiat and crypto-assets) raised by an ICO;
• proper account processing and financial disclosure of funds raised by an ICO;
• safety assurance in respect of the newly issued tokens, their blockchain, smart contracts, wallet tools and the like; and
• proper valuation of newly issued tokens.

Furthermore, amendments to the FIEA are expected to impose disclosure requirements on crypto-asset issuers (where applicable) that are similar to the disclosure regime applicable to securities.

Under the current FIEA, regulations regarding crypto-assets, such as general prohibitions on misconduct and bans on the dissemination of false rumours, fraudulent schemes and market manipulation, are in place, similar to the regulations governing unfair trading of listed securities and other instruments; however, there are no provisions directly regulating insider trading. In light of international developments and to ensure fair trading, the Amendment Bill to the FIEA will establish a regulatory framework for insider trading in crypto-assets based on the framework for listed securities. Specifically, the amendments will prohibit persons in a special position (insiders) with access to “material facts” from engaging in trading or similar activities prior to the public disclosure of such facts.

Specifically, Article 171-7, paragraph 1 of the Amendment Bill of the FIEA stipulates that persons related to a specified crypto-asset issuer (eg, officers of a specified crypto-asset issuer) who have become aware of material facts concerning specified crypto-assets, etc, may not, until after the public disclosure of such material facts, engage in trading or other transactions involving such subject specified crypto-assets until such material facts have been publicly disclosed.

In 2018, following the leakage of users’ crypto-assets worth approximately USD530 million from a cyber-attack on one of the biggest CAESPs, the JFSA conducted sweeping on-site inspections of registered and provisional CAESPs. This was followed by the JFSA’s announcement on 8 March 2018 that it was imposing business suspension orders on two provisional CAESPs and business improvement orders on two registered CAESPs and three provisional CAESPs. After further review, the JFSA also imposed business improvement orders on six additional major registered CAESPs on 22 June 2018. In addition, on 21 June 2019, the JFSA imposed a business improvement order on a CAESP for inadequacies in its business management, AML/CFT and risk management systems, among other things.

On 10 November 2022, FTX Japan received an administrative disposition from the JFSA, including a business suspension order and a business improvement order, amid the financial difficulties experienced by its parent company, FTX Trading Limited. On 11 November 2022, FTX Trading and its group companies filed for Chapter 11 bankruptcy protection under the US Federal Bankruptcy Code. The filing included FTX Japan and its parent company, FTX Japan Holdings. More recently, on 26 September 2024, the JFSA issued a business improvement order to a registered CAESP in response to the unauthorised outflow of approximately 4,500 BTC. It cited serious deficiencies in system risk and information security controls and measures to prevent these incidents (eg, centralised key management and insufficient wallet diversification).

Additionally, the JFSA has been issuing warnings to CAESPs (including offshore entities) that offer services to residents of Japan without registering with the JFSA, instructing them to cease these activities immediately. In 2023, the JFSA announced it had issued four of these warnings and in 2024, it announced it had issued six. Furthermore, according to media reports, in early February 2025, the JFSA requested that Apple and Google remove the mobile applications of the five exchanges that had been the subject of the 2024 warnings from their Japan-facing app stores and both platforms complied.

The JFSA’s enforcement stance is expected to remain consistent in principle going forward. However, the impact of the above amendment to the FIEA on this enforcement stance should continue to be monitored.

As described in 2.2 Crypto-Asset Regulatory Frameworks, under the PSA, a person who, as a business, engages in:

• the purchase and sale of crypto-assets or the exchange of crypto-assets for other crypto-assets;
• the intermediary, brokerage or delegation of such acts;
• the management of users’ money in connection with these acts; or
• the management of crypto-assets for the benefit of another person,

is required to register as a CAESP.

The registration requirement applies to operators that provide CAES to residents of Japan, regardless of where the operator itself is located. Accordingly, even an overseas operator without a physical presence in Japan must obtain a CAESP registration if it provides CAES to residents of Japan. As described in 6.1 Payments, the JFSA has been issuing warnings to such unregistered overseas operators.

Note that a person engaging in the new “Crypto-Asset Transaction Business” must be registered with the JFSA as an FIBO under the Amendment Bill of the FIEA. The Crypto-Asset Transaction Business covers the following activities:

(i) the purchase and sale of crypto-assets (including the exchange of crypto-assets for other crypto-assets);

(ii) the intermediary, brokerage or delegation of such purchase and sale;

(iii) the underwriting of Specified Crypto-Assets;

(iv) the offering or sale of Specified Crypto-Assets;

(v) the handling of solicitation for the acquisition of Specified Crypto-Assets;

(vi) the management of users’ money in connection with the activities listed in (i) through (v);

(vii) the management of crypto-assets for the benefit of another person; and

(viii) the borrowing of crypto-assets.

The bill includes transitional measures outlined below.

• Existing CAESPs registered under the PSA on the effective date (excluding those that are also FIBOs) may continue to engage in the Crypto-Asset Transaction Business (excluding crypto-asset borrowing; the same applies hereinafter) without obtaining a FIBO registration under the FIEA for a period of six months from the effective date.
• Existing FIBOs that are registered as CAESPs under the PSA on the effective date may continue to engage in the Crypto-Asset Transaction Business without obtaining a registration change under the FIEA for a period of six months from the effective date.
• Where any such existing operator under (i) or (ii) above files an application for FIBO registration or a registration change within that six-month period, it may continue to operate until such registration or change is granted or refused, subject to a maximum extension period of two years from the effective date.

Applicants for CAESP status are required to be (i) stock companies (kabushiki-kaisha) or (ii) foreign CAESPs with an office and representative in Japan and registered or licensed in a foreign country. Accordingly, any foreign entity wishing to register as a CAESP must establish either a subsidiary (in the form of a kabushiki-kaisha) or a branch in Japan. To date, however, no instances of registration as a branch have been approved by the JFSA. Thus far, all foreign CAESPs have established subsidiaries in Japan and have obtained registration of those subsidiaries.

In addition, applicants must have:

• a sufficient financial base (ie, a minimum capital of JPY10 million and positive minimum net assets);
• a satisfactory organisational structure and certain internal systems for the appropriate and proper provision of CAES; and
• internal systems to ensure compliance with applicable laws and regulations.

Applicants must submit a registration application containing, among others:

• its trade name and address;
• the amount of its capital;
• the names of its directors;
• the names of the crypto-assets it will handle;
• the content of and the means by which it will provide the relevant CAES;
• the names of outsourcees (if any) and the addresses thereof; and
• the method by which the management of its users’ assets will be segregated from the management of its own assets.

A registration application must be accompanied by certain attachments, including:

• a document pledging that there are no circumstances constituting grounds for refusal of registration;
• an extract of the certificate of residence of the applicant’s directors, etc;
• the résumés of the applicant’s directors, etc;
• a list of the applicant’s shareholders;
• the applicant’s financial documents;
• documents regarding the establishment of an internal system for ensuring proper and secure provision of CAES by the applicant;
• an organisational chart in respect of the applicant;
• the applicant’s internal rules; and
• a form of the contract to be entered into with users.

During the registration process, the JFSA will request that applicants complete a checklist consisting of more than 400 questions to verify that they have established internal systems for the proper and secure provision of CAES.

In addition, the JFSA will separately prepare a detailed progress chart for purposes of verifying the checking process. The registration process essentially serves as a due diligence exercise by the JFSA to determine whether to approve an applicant’s registration. To make progress in the registration process, it is necessary for an applicant to add a number of executives and employees with practical experience in Japanese financial institutions to its organisational chart, to develop various internal regulations equivalent to those of financial institutions, to invest in systems to ensure that the services provided are appropriate and to go through checks by the JFSA.

CAESPs and EPIESPs must promptly report any changes in their major shareholders to the JFSA. A major shareholder is defined as a shareholder that holds 10% or more of the voting rights. Although prior approval of a major shareholder is not required, it is common practice to notify the regulatory authorities of a proposed new major shareholder in advance whenever possible.

There is no regime in Japan that allows financial licences to be passported into other jurisdictions.

As described in 3.1 Licensing Requirements, a foreign entity is not permitted to conduct any transaction pertaining to CAES with residents in Japan unless it is registered as a CAESP and is further prohibited from soliciting any such transaction. In this regard, acts such as posting advertisements concerning transactions pertaining to CAES on any websites, etc (the “Advertisement”), by a foreign entity are, in principle, deemed to constitute solicitation of residents in Japan.

However, such Advertisement shall not be deemed to constitute solicitation of persons in Japan as long as reasonable measures are taken to prevent the Advertisement from leading to transactions pertaining to CAES with persons in Japan, including, among others, the following measures:

Disclaimer

A foreign entity must include a disclaimer in each advertisement clearly stating that it does not provide its services to customers in Japan. The disclaimer must satisfy the following requirements:

• no additional use of any computer or device (other than for viewing the Advertisement) is required for reading and understanding the disclaimer; and
• the disclaimer must be in a language reasonably deemed readable and understandable by those in Japan accessing the website.

Measures to Prevent Transactions with Customers in Japan

A foreign entity must take the following measures to prevent transactions pertaining to CAES with customers in Japan:

• at the time of a transaction, the foreign entity must implement a procedure to confirm the customer’s country/jurisdiction of residence by requiring the customer to submit his/her address, mailing address, e-mail address, payment method and other information;
• in cases where there are reasonable grounds to believe that a transaction pertaining to CAES has been clearly concluded with customers in Japan, the foreign entity must take care not to accept any orders from such customers in Japan; and
• the foreign entity must be attentive in ensuring that it does not conduct any act of inducing customers in Japan to engage in transactions pertaining to CAES (eg, establishing a call centre for customers in Japan or linking websites targeted at customers in Japan).

Conversely, there is no express statutory exemption corresponding to reverse solicitation under the PSA.

Note that, under the Amendment Bill of the FIEA, a Foreign Crypto-Asset Transaction Business Operator (meaning a person, other than a FIBO, that engages in the Crypto-Asset Transaction Business in a foreign country in accordance with the laws and regulations of such foreign country) may, without obtaining a registration for the Crypto-Asset Transaction Business, be permitted to (i) conduct transactions with a FIBO (limited to those engaging in the Crypto-Asset Transaction Business) as the counterparty or in other cases prescribed by Cabinet Order or (ii) conduct transactions in response to orders received from residents in Japan without solicitation, among others; however, the details remain subject to the forthcoming Cabinet Order.

Even where an external firm uses a white-label solution that leverages the licence of an existing licensed entity, the external firm must obtain the necessary financial licences, such as a CAESP, FIBO or other applicable licences, in accordance with the crypto-assets or other financial products that it sells.

Under Japanese law, it is unclear whether activities related to decentralised finance, including those involving decentralised exchanges, fall within the scope of CAES as defined in the PSA. Accordingly, when considering the provision of DeFi services in Japan, it is necessary to examine on a case-by-case basis whether such services constitute CAES.

In addition, the Working Group Report included the status of its policy considerations regarding DeFi. According to the report, with respect to DeFi developers, the Financial System Council intends, while monitoring developments in other jurisdictions, to consider an appropriate regulatory approach tailored to the technical characteristics of protocols, which would differ from the current regulatory framework applicable to CAESPs. The report also states that, for providers of user interfaces (UIs), such as applications that connect to DeFi services and are made available to residents in Japan, the Council intends first to deepen its understanding of the actual services provided through such UIs, while keeping a close eye on regulatory developments in other jurisdictions, with a view to imposing proportionate and risk-based regulation. This may include a duty to explain the risks associated with the connected service and AML/CFT measures, such as know-your-client (KYC) obligations.

As noted above, the JFSA is still considering its regulatory response to DeFi and, in practice, CAESPs in Japan are not permitted to utilise DeFi in connection with the provision of their products and services.

As set out above, under Japanese law, it is unclear whether DeFi-related activities fall within the scope of CAES. If such activities do constitute CAES, registration as a CAESP would be required and in that case, it would be necessary to establish a stock company (kabushiki kaisha). However, in practice, it would generally be difficult to operate DeFi in compliance with existing CAES regulations.

Conversely, if DeFi-related activities do not fall within the scope of CAES or other regulated activities, there are no particular restrictions on the corporate structure. Nevertheless, under the Companies Act, if a foreign company continues to conduct business in Japan, it must appoint a representative in Japan and register the company accordingly.

At present, we are not aware of any specific cases in which regulators or courts in Japan have held service providers liable for activities related to DeFi.

As noted above, although it is not clear whether DeFi-related activities fall within the scope of CAES, if issues such as consumer harm were to arise, those activities could be construed as constituting CAES and criminal liability might also be pursued on that basis.

In Japan, if a monetary obligation is discharged by transferring crypto-assets, such discharge would be regarded as substitute performance under the Civil Code. There are no specific regulations applicable to substitute performance using crypto-assets.

Several RWA token projects are currently in development in Japan, such as the “Sake World NFT”, which operates a marketplace for NFTs called “Sake Tickets” that are redeemable for Japanese sake and “NOT A HOTEL,” a service selling fractional ownership rights in vacation homes as NFTs. The issuance and sale of tokens representing rights to various RWAs (RWA Tokens) in Japan is expected to continue in the foreseeable future.

There is, however, no specific definition or regulatory framework for RWA Tokens under Japanese law. As a result, their legal nature must be determined on a case-by-case basis according to the functions and purposes of the RWA Token in question.

Against this backdrop and given the existing issues surrounding the legal nature of RWA Tokens, efforts have been made to provide greater legal certainty. More specifically, in the FY2023 Supplementary Budget Project “Demonstration Project for Building Digital Public Goods Utilising Web3.0 and Blockchain”, implemented by the Social Implementation Promotion Centre under the Ministry of Economy, Trade and Industry (METI), “The Guidelines for Utilising RWA Tokens” were published in February 2025 for the purpose of clarifying the legal issues related to RWA Tokens.