When working with crypto exchange requirements Japan, the legal framework that governs crypto platforms in Japan. Also known as Japanese crypto licensing, it covers licensing, AML/KYC compliance, and security standards enforced by the Financial Services Agency (FSA). This framework requires any exchange that wants to operate in the country to obtain a Type‑1 or Type‑2 licence, depending on whether it offers fiat‑to‑crypto or crypto‑to‑crypto services. The licence application demands detailed corporate disclosures, proof of capital adequacy, and a clear governance structure. In practice, the FSA checks that the company has a physically located office, a board of directors with relevant experience, and a robust internal control system. If you’re a startup eyeing the Japanese market, expect to prepare a comprehensive business plan, risk‑management procedures, and evidence of cybersecurity measures before the regulator even schedules an interview.
Beyond the initial licence, AML/KYC regulations form the second pillar of compliance. The FSA aligns Japan with the Financial Action Task Force (FATF) standards, meaning exchanges must verify the identity of every user, monitor transactions for suspicious patterns, and retain records for at least five years. Practical steps include integrating reliable identity‑verification services, deploying transaction‑monitoring software that flags large or rapid movements, and establishing a dedicated compliance officer who can file Suspicious Activity Reports (SARs) on time. Failure to meet these duties can lead to hefty fines or revocation of the licence, as seen in the 2025 enforcement roundup where several platforms faced penalties for weak AML controls. Security standards are the third compliance pillar. The FSA expects exchanges to implement multi‑factor authentication, cold‑storage for the majority of customer funds, and regular penetration testing by certified firms. Moreover, platforms must publish a security audit report annually, detailing how they protect against hacks, insider threats, and operational failures. In this regard, the exchange security standards often borrow from global best practices like ISO/IEC 27001 certification and the NIST Cybersecurity Framework. For traders, this translates into more confidence that their assets are shielded, while for operators it means a continuous investment in tech upgrades and staff training.
Understanding these three pillars—licensing, AML/KYC, and security—helps you gauge whether a Japanese exchange aligns with your risk tolerance and operational goals. Below, you’ll find a curated set of articles that dive deeper into real‑world examples, from exchange enforcement actions to detailed reviews of platforms that have either succeeded or stumbled under Japan’s stringent rules. Use these insights to make informed decisions, spot red flags early, and stay ahead of regulatory changes that could affect your crypto journey.
A practical guide to Japan's PSA registration for crypto exchanges, covering legal forms, capital, asset segregation, foreign subsidiary rules, timelines, and common pitfalls.