🇯🇵Japan

Detailed overview

Japan at a glance

Japan is mid-transition, moving crypto from the PSA (payments) toward the FIEA (securities). Crypto exchanges register with the FSA as CAESPs today; a FIEA amendment (Cabinet-approved 10 April 2026, Lower House passed, not yet law) would reclassify crypto as financial instruments — insider-trading rules, disclosure, a path to spot ETFs, and a separate flat 20% tax expected 2028 — effective around 2027. Stablecoins stay under the PSA as EPIs (banks/trust/fund-transfer issuers; registered intermediaries). Payments run under the PSA (funds-transfer Type 1 licensed, Types 2–3 registered; prepaid instruments; BNPL under METI). Gambling is prohibited by the Penal Code except public channels — casinos only inside Integrated Resorts (only Osaka approved; MGM Osaka ~2030), plus public racing/lottery/toto; private and offshore online casino is illegal and facing an intensifying crackdown.

Crypto regime — early mover, now shifting from payments to securities law:

• PSA (crypto assets; from 1 April 2017) — CAESP registration with the FSA after Mt. Gox; asset segregation, cold-storage custody, AML/CFT, and JVCEA self-regulation; around 105 tokens approved for domestic trading and over 13 million crypto accounts
• FIEA reclassification (the defining 2026 reform) — the Financial System Council's Working Group (June–December 2025) recommended moving crypto to the FIEA as investment products; the Cabinet approved the amendment on 10 April 2026 and the Lower House passed it, with Upper-house passage pending — it is not yet law, with effect targeted around 2027; it adds insider-trading prohibitions, mandatory issuer disclosures, third-party code audits, a rebrand to "crypto-asset dealers," far higher penalties (unregistered operation up to 10 years' imprisonment / JPY 10 million), and a path to regulated spot crypto ETFs
• Tax reform (separate) — under the 2026 Tax Reform Outline, crypto gains would move from progressive miscellaneous income (up to ~55%) to a flat 20% with a three-year loss carry-forward, expected to take effect in 2028
• Stablecoins (EPIs; PSA, from 1 June 2023) — explicitly excluded from the FIEA shift and kept under the PSA as payment instruments: issuance limited to banks, trust companies and fund-transfer providers, with full reserves and segregated custody; intermediaries register as EPI exchange providers; the megabanks (MUFG, SMBC, Mizuho) and others (JPYC, SBI/Startale) are advancing yen stablecoins; algorithmic stablecoins are treated as crypto assets
• 2025 PSA amendment — lighter registration for crypto intermediaries acting under a CAESP's mandate (effective by June 2026)
• Security tokens — FIEA "electronically recorded transferable rights"; Type I licence; secondary trading on FSA-authorised PTS venues
• AML — Act on Prevention of Transfer of Criminal Proceeds; travel rule; e-KYC available

Payments and e-money regime (Payment Services Act):

• Funds Transfer Service Providers — three tiers since the 2021 amendment: Type 1 (remittances of JPY 1 million and above; FSA approval/licence, with specific-instruction and holding-period limits the FSA is considering relaxing), Type 2 (up to JPY 1 million; registration; 100% balance safeguarding via trust/deposit/guarantee), and Type 3 (up to JPY 50,000; lighter registration)
• Prepaid Payment Instruments — e-money/prepaid issuers register (third-party) or notify (own-use), preserving at least 50% of unused balances
• Deferred payment / BNPL — authorised by METI under the Installment Sales Act, outside the FSA's PSA remit
• Stablecoins — overlap via the EPI regime (issuers limited to banks/trust/fund-transfer)
• Banking and rails — FSA-licensed banks (including internet-only banks); domestic clearing via the Zengin System; single-regulator-per-statute design
• Currency: Japanese yen (JPY), free-floating; the Bank of Japan intervenes only rarely to smooth volatility

Gambling regime — Penal Code prohibition with narrow public exceptions and an IR opening:

• Penal Code (Arts. 185–187) — gambling is a criminal offence unless specifically authorised
• Integrated Resorts (IR Promotion Law 2016; IR Implementation Law 2018) — land-based casino gaming is legal only inside a licensed IR; the Casino Regulatory Commission (established January 2020) licenses and supervises operators; up to three IRs were initially permitted, but only Osaka has been approved (area plan certified 14 April 2023) — MGM Osaka, a roughly JPY 1.27 trillion project, is targeted to open around 2030; resident entry fees (JPY 6,000), visit limits (3/week, 10/month) and a 30% gaming levy apply
• Public sports betting — horse racing (JRA/local), bicycle (keirin), motorboat (kyōtei) and auto racing, operated by public/quasi-public bodies, with online betting permitted through official operators (use grew during the pandemic)
• Lottery and toto — the takarakuji lottery and the sports-promotion lottery (toto/BIG, for football) are publicly operated, with online sales
• Pachinko — a large (~JPY 20 trillion) sector treated as "amusement" under the Entertainment Establishments Act rather than gambling, regulated by public-safety authorities
• Online casino — illegal, including offshore platforms targeting residents; the Basic Act on Countermeasures Against Gambling Addiction, amended (passed June 2025; in force 25 September 2025), now prohibits operating or presenting websites/apps that provide access to illegal online gambling; the 2025 Basic Plan has the NPA, FSA and METI suppressing remittances and card payments to online casinos, and the MIC is weighing ISP blocking; the NPA estimates around 3.37 million users despite illegality, and enforcement (including against affiliates and payment agents) has intensified through 2026
• Minimum age: 20 for casinos; 18+ for public sports betting, lottery and pachinko

Last verified: May 2026. Reference rate: USD 1 = JPY 155 (JPY 100 ≈ USD 0.65). The yen floats freely; the Bank of Japan intervenes only rarely to smooth excessive volatility.

Japan is an early-mover jurisdiction in mid-reform: crypto is moving from the PSA (payments) toward the FIEA (securities) — Cabinet-approved in April 2026 but not yet law, effective around 2027, with a flat 20% tax from 2028 — while stablecoins stay under the PSA as bank/trust/fund-transfer-issued Electronic Payment Instruments. Payments run on the PSA's funds-transfer and prepaid regimes, and gambling is a Penal Code prohibition opened only for Integrated-Resort casinos (Osaka first, ~2030) and public racing/lottery/toto, with private and offshore online casino illegal and actively policed.

Is there a crypto licence in Japan?

Yes — and it is being upgraded. Today, crypto-asset exchange service providers register with the FSA under the Payment Services Act. A FIEA amendment that would reclassify crypto as financial instruments (and rename exchanges "crypto-asset dealers") was Cabinet-approved on 10 April 2026 and passed by the Lower House, but is not yet law; it is targeted to take effect around 2027. Stablecoins are licensed separately under the PSA.

The legal foundation:

• PSA (crypto assets) — CAESP registration with the FSA; segregation, custody, AML, JVCEA self-regulation
• FIEA amendment (pending) — reclassification as financial instruments; insider-trading rules, disclosure, code audits, spot-ETF path; effect ~2027
• PSA (EPIs) — fiat-backed stablecoins issued only by banks/trust/fund-transfer; EPI exchange registration for intermediaries
• FIEA (security tokens) — electronically recorded transferable rights; Type I licence
• Tax — flat 20% crypto-gains regime expected 2028 (from progressive up to ~55%)

Structure:

• A Japanese entity with FSA registration, positive net assets and minimum capital, Japanese-financial-institution-grade staffing, internal rules and systems, cold-storage custody and AML programmes; JVCEA membership in practice
• Stablecoin issuance is reserved to regulated financial institutions; EPI intermediaries register separately
• Firms should plan against both the current PSA regime and the incoming FIEA framework (disclosure, insider trading, dealer status)

Operational reality:

• Japan is one of the world's largest, most mature retail crypto markets, with rigorous, protection-first supervision and a methodical reform process — but compliance is heavy (industry has flagged that many domestic exchanges run at a loss)
• The FIEA shift opens institutional doors (spot ETFs, clearer investment status, a competitive 20% tax) while raising the disclosure and conduct bar
• Japanese registration does not passport into the EU (a MiCA CASP authorisation is separate); independent Japanese financial, AML and tax counsel and early FSA/JVCEA engagement are essential

Payments & E-money (FSA — Payment Services Act)

Best for remittance, e-money, prepaid and wallet operators prepared to register (or, for high-value remittance, obtain approval) under the PSA and meet balance-safeguarding standards — with BNPL handled separately by METI.

What it is: A modular regime under the PSA, supervised by the FSA, covering funds-transfer service providers (three tiers), prepaid payment instruments, and — via the EPI rules — stablecoins; deferred-payment/BNPL sits with METI under the Installment Sales Act.

Who it suits: Remittance and money-transfer providers, e-money and prepaid issuers, wallet operators, and (through EPI) regulated stablecoin issuers and intermediaries, plus banks.

Covers: Domestic and cross-border remittance (Types 1–3), prepaid/e-money issuance, EPI (stablecoin) handling, and deferred payment via METI; deposit-taking via the Banking Act.

Operational requirement: A Japanese entity; FSA registration (Type 2/3 funds transfer; prepaid) or approval (Type 1); safeguarding of outstanding balances (trust/deposit/guarantee — broadly 100% for Type 1/2; at least 50% of unused prepaid balances); AML/CFT; access to the Zengin clearing system where applicable.

Headline figures

• Primary instruments: Payment Services Act; Banking Act; Installment Sales Act (METI, for BNPL); Act on Prevention of Transfer of Criminal Proceeds
• Regulators: FSA (funds transfer, prepaid, EPI, banking); METI (deferred payment)
• Funds-transfer tiers: Type 1 (JPY 1m+, approval); Type 2 (≤ JPY 1m, registration); Type 3 (≤ JPY 50,000, lighter registration)
• Safeguarding: ~100% balance preservation (Type 1/2); ≥50% of unused prepaid balances
• Stablecoins: EPIs issuable only by banks, trust companies and fund-transfer providers
• Currency: JPY, free-floating; no exchange controls

Is there a gambling licence in Japan?

Only narrowly. The Penal Code bans gambling except for specific public exceptions: land-based casinos inside licensed Integrated Resorts (only Osaka approved so far), and publicly operated horse/bicycle/motorboat/auto racing, the lottery and football toto (which can be bet online). Private and offshore online casino is illegal — and enforcement has intensified sharply in 2025–2026.

The legal foundation:

• Penal Code (Arts. 185–187) — gambling prohibited unless authorised
• IR Implementation Law (2018) — casino gaming legal only inside a licensed IR; Casino Regulatory Commission oversight
• Public-sports, lottery and toto statutes — publicly operated racing, lottery and football toto (online sales permitted)
• Basic Act on Countermeasures Against Gambling Addiction (amended 2025) — prohibits operating/presenting access to illegal online gambling; underpins the online-casino crackdown

Structure:

• Casinos — only within a licensed IR (Osaka/MGM Osaka, ~2030); resident entry fees, visit limits, addiction controls; 30% gaming levy
• Public sports/lottery/toto — public/quasi-public operators; online betting/sales through official channels
• Online casino — illegal (including offshore); NPA/FSA/METI action on payments and affiliates; MIC weighing ISP blocking
• Minimum age 20 (casinos); 18+ (public sports betting, lottery, pachinko)

Gambling — Casino Licence within an Integrated Resort (Casino Regulatory Commission; IR Implementation Act)

Best for large integrated-resort developers able to meet IR investment and probity requirements; not for online, sports-betting or standalone casino operators.

What it is: A Casino Regulatory Commission licence to operate casino gaming inside a licensed Integrated Resort that also provides hotels, MICE and tourism facilities — currently only the approved Osaka IR.

Who it suits: Major integrated-resort operators/consortia; not online-casino, private or sports-betting operators, which cannot be licensed.

Covers: Land-based casino gaming within the IR; public racing, lottery and toto are operated separately by public bodies; online casino is prohibited.

Operational requirement: A certified IR area plan and operator licence; very large capital investment; probity and suitability vetting; strict AML/CFT; resident entry fees and visit limits; addiction-prevention measures; the 30% gaming levy (national/local) and licensing fees.

Headline figures

• Primary instruments: Penal Code; IR Promotion Law (2016); IR Implementation Law (2018); Basic Act on Countermeasures Against Gambling Addiction
• Regulators: Casino Regulatory Commission (IR casinos); NPA (enforcement); MIC (proposed ISP blocking); public-sector operators (racing/lottery/toto)
• Market access: casinos only inside IRs (only Osaka approved; MGM Osaka ~2030); public racing/lottery/toto online; private/offshore online casino illegal
• Tax: 30% casino gaming levy (split national/local); resident entry fee JPY 6,000; public operators fund public purposes
• Player protection: min age 20 (casinos); visit limits; intensifying online-casino enforcement

Costs and timelines at a glance

• Crypto: CAESP registration (FSA; PSA; ~JPY 10m minimum capital, positive net assets, cold storage, JVCEA) — moving to "crypto-asset dealer" status under the pending FIEA amendment (Cabinet-approved 10 Apr 2026; not yet law; effect ~2027); EPI stablecoins under PSA (banks/trust/fund-transfer issuers only); security tokens under FIEA (Type I); flat 20% tax expected 2028
• Payments primary instruments: Payment Services Act; Banking Act; Installment Sales Act (METI); Act on Prevention of Transfer of Criminal Proceeds
• Payments regulators: FSA (funds transfer/prepaid/EPI/banking); METI (BNPL)
• Entry/safeguarding: funds transfer Type 1 (approval) / Type 2–3 (registration), ~100% balance safeguarding; prepaid ≥50% preservation
• Reform pipeline: FIEA crypto reclassification (~2027) and spot ETFs; 20% crypto tax (2028); yen-stablecoin rollout; funds-transfer convenience relaxations
• Gambling: Penal Code prohibition; IR casinos only (Osaka/MGM Osaka ~2030; 30% levy; entry fee JPY 6,000); public racing/lottery/toto online; online casino illegal (2025–2026 crackdown); min age 20 (casino)/18 (public)
• Currency: JPY, free-floating; no exchange controls
• FX: USD 1 = JPY 155 (JPY 100 ≈ USD 0.65)

Who Japan suits and who it does not

Suitable for

• Crypto exchanges and custodians prepared to meet the FSA's CAESP standards now and the incoming FIEA "dealer" regime (disclosure, insider-trading rules), targeting one of the world's largest retail markets ahead of spot ETFs and a 20% tax
• Regulated financial institutions (banks, trust and fund-transfer providers) issuing yen stablecoins as EPIs, and intermediaries registering to handle them
• Security-token issuers and platforms using the FIEA/ERTR framework and FSA-authorised secondary venues
• Remittance, e-money, prepaid and wallet operators able to register (or obtain Type 1 approval) under the PSA and safeguard balances, plus BNPL providers working with METI
• Major integrated-resort developers able to meet IR investment and probity requirements, in a stable, advanced, rule-of-law economy

Not suitable for

• Crypto firms wanting a finished securities-grade regime today — the FIEA reform is not yet law and is targeted around 2027, so the current PSA rules still govern
• Stablecoin issuers outside the bank/trust/fund-transfer perimeter, or algorithmic-stablecoin models (treated as crypto assets)
• Crypto or payment businesses needing EU passporting — Japanese authorisations do not passport (a MiCA CASP authorisation is separate)
• Payment firms expecting an EU-style EMI passport, or those unprepared for Japan's heavy compliance and balance-safeguarding requirements
• Any private or offshore online-casino operator — online casino is illegal (including from abroad), with payments, affiliates and access all under intensifying enforcement, and casinos are otherwise limited to a single approved Integrated Resort