Cryptocurrency Regulations and Laws in Japan
Discover Japan’s cryptocurrency regulations, taxes, and licensing laws. Learn how crypto is recognized as legal property, how exchanges are regulated under the Payment Services Act, and what taxes apply to trading and mining.
Japan is one of the most crypto-progressive countries in the world, with a clear legal framework for cryptocurrency exchanges, trading, and taxation. It was among the first nations to recognize Bitcoin as legal property and to implement formal licensing for crypto exchanges.
Summary
Japan recognizes cryptocurrencies as legal property under the Payment Services Act and has one of the most developed regulatory frameworks for digital assets. The country licenses exchanges, enforces strict KYC/AML policies, and taxes capital gains from crypto. Its proactive stance has made Japan a model for balanced regulation.
Legal Status
- General Use: Legal
- Trading: Legal and regulated
- Exchanges: Licensed and regulated under the Payment Services Act
- Mining: Legal
- ICOs & Tokens: Allowed but must comply with Financial Instruments and Exchange Act (FIEA) if considered securities
- NFTs: Legal and generally treated as digital property
Taxation
Crypto is treated as miscellaneous income and is subject to progressive income tax rates for individuals. Businesses are taxed under corporate tax rules.
- Capital Gains Tax: Yes — part of income tax; up to 55% for individuals
- Income Tax on Crypto Earnings: Yes (miscellaneous income)
- Mining Taxation: Taxable as income
- Reporting Requirements: Annual tax return must include crypto profits
Regulatory Bodies
- Financial Services Agency (FSA): Regulates exchanges, ICOs, and general crypto activity
- Japan Virtual and Crypto Assets Exchange Association (JVCEA): Self-regulatory body overseeing licensed exchanges
- National Tax Agency (NTA): Handles taxation of crypto-related income
Key Regulations & Laws
- 2017 Payment Services Act Amendment: Recognized Bitcoin and other cryptos as legal property; introduced exchange licensing
- 2020 Revised PSA and FIEA: Added stricter rules for custodians, derivatives, and security tokens
- Ongoing Revisions: Address hot wallet management, reserve assets, and DeFi guidance
Timeline of Regulatory Milestones
| Year | Event | Description |
|---|---|---|
| 2014 | Mt. Gox collapse | Prompted government scrutiny of crypto |
| 2017 | PSA enacted | Legalized crypto as property; exchange licensing began |
| 2020 | PSA and FIEA amendments | Expanded scope to cover custody, security tokens |
| 2022 | JVCEA enforcement | Tougher rules for token listings and AML practices |
| 2024 | DeFi and NFT guidance | Ongoing updates to clarify emerging use cases |
Resources
- Financial Services Agency (FSA)
- Japan Virtual and Crypto Assets Exchange Association (JVCEA)
- National Tax Agency (NTA)
- Crypto Tax Guidance – NTA (in Japanese)
Notes
- Travel Tip for Crypto Users: Some merchants accept crypto, especially in tech-savvy cities like Tokyo and Osaka.
- Local Adoption Trends: Japan has high trust in licensed exchanges and a mature market focused on investor protection.
- Language Notes: Most government documents are in Japanese; major crypto sites and resources often provide English translations.