Japan Cryptocurrency Exchange License

Over the past decades, Japan has been and remains one of the world’s leading centers for the development of information technology. Its modern and secure infrastructure, as well as a high-quality regulatory landscape, make this jurisdiction optimal for running various types of businesses — including those related to electronic money, blockchain, and crypto assets.

A Japan cryptocurrency exchange license is your entry ticket into an actively developing industry with strong scaling potential. Learn more about the specifics of Japanese legislation, regulatory aspects, and the requirements for those wishing to obtain a license in this jurisdiction. A detailed overview of the processes from the experts at Lawrange.

Key Requirements for a Cryptocurrency License in Japan

If you are planning to apply for a cryptocurrency license in Japan, you must first prepare. To do so, you need to understand what requirements exist for recipients or applicants for a work permit in the jurisdiction. While there aren’t too many, there are still enough, including:

• Registration with the Financial Services Agency (FSA).
• Capital Requirements.
• AML and KYC Compliance.
• Detailed Business Plan.
• Physical Office in Japan.
• Ongoing Reporting and Audits.

Let’s go through each requirement in more detail and determine how easy it is for the average entrepreneur to comply.

Registration with the Financial Services Agency (FSA)

To qualify for a crypto license in Japan, the applicant must meet a number of local legal requirements. The key one is registration with the Financial Services Agency of Japan (FSA). In fact, this is the only legal way to operate within the jurisdiction for a business dealing with crypto assets.

Here are the key requirements for registration with the FSA:

• A legal entity with a local office and staff.
• Minimum authorized capital, with several additional nuances.
• Compliance with KYC/AML rules.
• Protection of the business’s digital infrastructure.
• Detailed reporting to the FSA.

Sounds simple? Each of these requirements includes several sub-requirements, so you must understand them to successfully complete the licensing process for your business. Let’s go over the items in more detail.

Capital Requirements

To obtain a cryptocurrency license in Japan, you will need a minimum starting capital. The base requirement is over 10 million yen, but the actual amount will depend on the type of license and the business format you plan to establish in the jurisdiction.

In addition to the size of the authorized capital, there are further requirements for how it is held. For example:

• The entrepreneur must have a bank account in one of Japan’s major banks.
• Funds must be diversified and labeled; there must be security guarantee reserves.
• Preliminary financial monitoring of the funds placed in the bank to secure the authorized capital.

The company’s initial budget does not cover operational expenses such as office rent, infrastructure development, or staff recruitment. Therefore, the actual capital amount should be somewhat higher than the base requirements. If you need help with calculations — Lawrange provides sample cost estimates based on its own practice.

AML and KYC Compliance

To qualify for a Japan cryptocurrency license, you will have to prove to local and international regulators that your business complies with key AML and KYC principles. This literally means the following:

• The software used must include both basic security tools and the ability to identify all clients and transactions.
• Operations between counterparties must be monitored for suspicious activity or violations.
• The brand must promptly notify the relevant authorities upon detecting unusual actions or actions that indicate misconduct.

In addition, the entrepreneur will be required to provide full reporting on prior activities, as well as identification of key stakeholders and their financial history.

Detailed Business Plan

To be able to proceed with the Japan crypto license registrer process, you must prove to the FSA that you are capable of managing a cryptocurrency business. This means that, in addition to the standard document package, you must submit a business plan that includes:

• A clearly described company structure, its activities, and other details.
• A business development plan for the next 3–5 years.
• A report confirming your market research and the feasibility of operating in that segment.
• A description of the main workflows, mechanisms, and software used, along with certificates of compliance.
• Proof of the staffing necessary to carry out the core activity within the country.

Moreover, the business must be managed from within Japan, although it does not have to be tied to a specific prefecture.

Physical Office in Japan

A Japan cryptocurrency exchange license is issued only to entrepreneurs who either own or rent property in the country on a long-term basis (this is part of the requirements for company registration in Japan). This implies additional expenses for the business, including hiring local staff.

The representative of a Kabushiki Kaisha-type company may even be a specialist without resident status, but they must live in Japan and manage the brand locally. 

Ongoing Reporting and Audits

If you plan to apply for a cryptocurrency license in Japan, you must be prepared to actively report to the FSA and undergo independent audits annually. This is standard practice in the country, but it can cause certain inconveniences if your document management system does not meet local standards.

That’s why, most likely, you will need assistance from Lawrange experts to prepare the required documentation — not only during operations, but also when submitting your license application. Especially at the early stages, since both the review period and your actual chances of success will depend on it.

Documents Needed to Acquire a Cryptocurrency Exchange License in Japan

To obtain a crypto license in Japan, you must submit a fairly extensive list of documents to the FSA, namely:

• A compliance letter confirming that the applicant has no history of cryptocurrency license application refusals.
• Certificates of no criminal record for all brand stakeholders.
• Certificate of company registration (in the Kabushiki Kaisha format).
• The company’s founding documents (charter, regulations, decision to form the company).
• List of the company’s shareholders.
• Documents reflecting the organizational structure of the business.
• Financial forecast of profits and losses for the first three years of operation.
• Internal company policies regulating the management of digital asset operations.
• Detailed profile of the director.
• Documents confirming the financial reliability of the management, absence of bankruptcy or guardianship over the directors.
• Proof of the director’s residential address.
• Profiles of responsible persons involved in digital currency operations.
• A list of digital assets the company plans to work with.

Note: This is a standardized list, although the actual set of documents may differ depending on the conditions and type of business applying for the license.

Regulatory Authorities for Cryptocurrency Companies in Japan

Although the cryptocurrency license in Japan is issued by the FSA, in total, there are three government regulators overseeing the activities of businesses related to crypto assets and associated operations. Specifically:

• The Financial Services Agency (FSA – Financial Services Agency)
• The self-regulatory organization for the crypto industry (JVCEA – Japan Virtual and Crypto Assets Exchange Association)
• The anti-financial crime agency (JFSA – Japan Financial Intelligence Center).

All three regulators play a significant role in shaping the legal landscape of the jurisdiction and are responsible for ensuring that cryptocurrency businesses comply with various norms, standards, and rules. And yes, you will be required to report to each of them.

Types of Cryptocurrency Activities in Japan

The Japan cryptocurrency license covers the following types of business activities:

Yes, a single license covers all of the above-listed activities, which significantly simplifies the process of transforming or scaling a cryptocurrency business within the jurisdiction.

Cryptocurrency Exchange Licensing Process in Japan

The Japan crypto license register process looks fairly simple and straightforward, and consists of five steps:

• First, you register and open a company in the country and deposit the share capital into the appropriate account.
• Next, you collect a full set of documents, translated into Japanese and notarized by a state notary.
• Then, you go through FSA monitoring procedures and provide proof of financial stability, cybersecurity, and more.
• You will also be assessed for the level of user fund protection and the presence of a risk management program.
• In the end, you are expected to be issued a license as a registered cryptocurrency exchange operator.

Formally, your application may be rejected. However, you can minimize such risks with legal support from Lawrange.

Taxation for Cryptocurrency Companies in Japan

The Japan cryptocurrency exchange license allows companies to engage in crypto-related activities. Like any other type of business, these operations are subject to taxation. The country has specific regulations for the sector with corresponding tax rates, namely:

• VAT at 10% of the transaction amount (not all operations are subject to VAT)
• Corporate income tax at a rate of 23.2% on net profit from cryptocurrency transactions
• Capital gains tax of up to 20% on the amount of sale (there are exceptions for long-term investments)
• Dividend tax of 5–20% for individuals and 20.315% for corporate taxpayers.

While Japan may not have the most lenient tax system, it is balanced by a stable economic and legal environment.

Timeframe for Obtaining a Cryptocurrency License in Japan

The process to apply for a cryptocurrency license in Japan is relatively lengthy compared to other jurisdictions. Submitting the application alone can take around 3–4 months, assuming all documents are in order and you pass all monitoring procedures promptly.

The typical timeframe for obtaining the license ranges from 6 to 12 months, but with the assistance of Lawrange, this period can potentially be shortened — provided you meet all jurisdictional requirements.

Why You Should Choose Lawrange

The legislation of Japan may seem perfect and effective, but not for foreigners. Navigating the legal landscape of this jurisdiction requires full knowledge not only of the language but also of the specifics of legislative and regulatory processes. For some businesses, including cryptocurrency ones, strict requirements apply that leave no room for compromise or repeated attempts to obtain licenses.

Lawrange has a representative office in Japan and knows the legislation of the jurisdiction thoroughly. So with our help, you will not only be guaranteed to obtain a license but also speed up the application review process, reducing it to a minimum.

Conclusions

Do you want to obtain a cryptocurrency license in Japan? Try to independently prepare all the necessary documents, rent an office, and hire staff after going through all the monitoring procedures.

Or delegate this task to the experts at Lawrange and receive full support with a guarantee of successful licensing and subsequent business launch!

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