Crypto: Japan, a world leader?  Analysis of a success story

How do you understand Japan’s current approach to the evolving crypto sector? Most of the answer to this question can be found in the country’s technological and cultural history. Indeed, when we think of the Japanese crypto ecosystem, we think of Satoshi Nakatomo, the alleged founder of Bitcoin. We remember that the country is undoubtedly one of the first to have adopted the crypto industry very early on. First, crypto mining activities. Second, by becoming a hub for crypto operations across the globe. A hegemony notably carried by platforms like Mt. Gox which collapsed in 2014. Since then, the situation has changed for the Japanese crypto industry, the authorities having made regulation their priority.

In this article, let’s analyze the current dynamism of the Japanese crypto market. This under the aegis of regulations that are committed to protecting users without paralyzing technological innovation, the DNA of the crypto sector.

Japan, a favorable environment for the emergence of cryptos?

We can probably say that cryptos are now popular in Japan. In any case, the government is in favor of their emergence. Indeed, the trends show a marked improvement in the adoption of these digital assets in the country. You only have to look at some figures from Statista to be convinced. Vendor data from 2020 shows that only 4% of the Japanese population used or held crypto. Figures significantly lower than those of countries such as China, India and Vietnam with 7%, 9% and 21% respectively.

However, these trends have been changing for some time. Especially since the global covid-19 pandemic. The latter has prompted a change in financial behavior, in particular the abandonment of fiat currency to the digital asset project. This paradigm shift is also driven by Tokyo.

Recently, Fumuo Kishida, the Japanese Prime Minister, announced a project typically focused on Web 3.0. An ecosystem that the authorities want to promote in accordance with their technology policy focused on innovation. This is in line with Japan’s ambition to position itself as a world leader in this field.

But this metamorphosis of the Japanese crypto landscape is not recent in itself. It started since at least 2021 with the launch of the stablecoin JPYCoin. It is a yen-backed stablecoin, the introduction of which aims to further encourage interest in cryptos.

In this attractive context, a dynamic is obvious. Relevant crypto projects are flourishing. Initiatives considered bad are eliminated under the influence of regulations tailored to the extent of Japanese financial realities.

What about crypto regulations in Japan?

The first thing to say about the regulation of the crypto industry in Japan is that it is well put together. The country is particularly acting as a good student on this issue. Cryptos are thus subject to clear and precise regulations in Japan. Rules whose application is controlled by the Japan Financial Services Agency (FSA). This, in close collaboration with the Japan Virtual Currency Exchange Association (JVCEA). Both being backed by the Japan Security Token Offering Association (JSTOA). Together, these three entities are working to put in place regulations adapted to the Japanese financial market.

In addition, Japanese lawmakers have tightened regulations around digital assets, particularly on derivatives trading. Through the Payment Services Act (PSA), cryptos are for example seen as non-fiduciary payment methods.

These, which can be used to make payments to unspecified persons. In addition, the law has the advantage of not restricting Japanese people from holding or investing in cryptos.

Strict Control of Crypto Exchange Services in Japan

Crypto exchange services are strictly regulated in Japan. A rigor that has links to sinkings of famous exchanges including Mt. Gox mentioned above. As a result, firms that provide crypto services are governed by atypical laws.

Thus, those recognized as crypto custody providers are subject to the Payment Services Act (PSA). Regarding crypto derivatives companies, the Financial Instruments and Exchanges Act (FIEA) applies to them.

In addition, the authorities have implemented a law on the prevention of the transfer of criminal proceeds (APTCP). It sets out a set of standards imposed on crypto exchanges operating in Japan. Its objective: to force them to take measures to prevent money laundering.

To ensure the implementation of these ambitions, the Japanese authorities have created two bodies. These include the Japan Financial Intelligence Center (JAFIC) and the Financial Intelligence Unit (FIU).

In addition, Japanese lawmakers have established stringent rules for operators of financial instrument services. Standards to which exchanges must submit in order to preserve the integrity of the market. Among these, formalities of customer identity checks, measures concerning the keeping of registers. On top of all this, crypto platforms are required to submit an annual compliance report to the FSA.

The latter also only allows firms with a highly authorized financial office to operate as a crypto exchange. The Agency has also reinforced its arrangements for monitoring transactions and exchanges to guarantee an adequate control system.

In the end, everything seems structured to ensure a solid evolution of the crypto industry in Japan. This, by guaranteeing the protection of investors and the security of transactions in the country. That said, what would be the outlook for the Japanese crypto market?

Promising reforms underway this year?

Despite Japan’s strictness when it comes to cryptos, the country does not seem to want to stop there. In 2022, Fumio Kishida, the Japanese Prime Minister, revealed the state’s plan to digitize national ID cards. A digital solution that is not unrelated to the country’s technological ambitions, involving cryptos. Several such reforms are planned for 2023.

These developments promise to simplify the regulatory environment for crypto projects in Japan. It is through the prism of this newfound attractiveness that Binance’s return to Japan can be understood. A market that it had left in 2018 amid regulatory difficulties.

According to experts, Japan’s crypto policy is likely to foster the emergence of new opportunities in the country. This, thanks to the competitiveness it promotes between crypto companies. Circumstances that should provide investors with greater confidence in using cryptos as a financial alternative.


It can be said that overall, Japan is clearly committed to crypto regulation and adoption. However, the country does not seem to want to ignore technological innovation and user protection.

The introduction of yen-pegged stablecoins offered some stability of value to investors. This, by stimulating the enthusiasm of the latter for cryptos. The reforms envisaged around the latter aim to consolidate this interest. This progress should stimulate the emergence of new prospects for the country’s financial future.

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