Japan

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Japan regulated crypto exchanges earlier than anyone. Amendments to the Payment Services Act enacted in 2016 and in force from April 2017 required exchanges to register with the Financial Services Agency, to segregate customer assets and to submit to audit. They made Japan the first G7 country with a statutory definition of a virtual currency. The Coincheck hack of January 2018, in which about US$ 530 million of NEM tokens were stolen from a registered exchange, led to tightened requirements. It also led to the recognition of the Japan Virtual and Crypto Assets Exchange Association as a self-regulatory body with binding rules.¹ Since 2020 tokens with investment characteristics have been regulated under the Financial Instruments and Exchange Act. Since June 2023 a stablecoin regime has allowed banks, trust companies and funds-transfer providers to issue fiat-backed stablecoins.

Japan's relevance to a Singapore or Swiss client lies less in competition than in access. Japan is a large market with strict rules on who may sell tokens to its residents, so a Singapore licensee that wants Japanese customers must either register in Japan or partner with a registered exchange. Japanese tax treats crypto gains of individuals as miscellaneous income at progressive rates up to 55 per cent, which has driven Japanese founders to Singapore and to Dubai. Proposals under discussion in 2025 and 2026 to move crypto assets into the Financial Instruments and Exchange Act and to tax gains at the flat rate applicable to securities would, if enacted, reduce that outflow.²

Notes

Japan, Payment Services Act (Act No. 59 of 2009) as amended by Act No. 62 of 2016, in force 1 April 2017 (registration of virtual currency exchange service providers); further amendments by Act No. 28 of 2019, in force 1 May 2020, renaming "virtual currency" as "crypto asset" and transferring security tokens to the Financial Instruments and Exchange Act. ↩
Japan Financial Services Agency, discussion papers of 2025 on the treatment of crypto assets under the Financial Instruments and Exchange Act and on the tax treatment of crypto gains; author's summary of the state of the debate at 30 June 2026. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of October 2026.

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Dr Alexander Ressos, TEP

Of Counsel, KGP Legal LLC

I am Of Counsel with KGP Legal LLC in Singapore, where I work with a global client base of successful entrepreneurs and their families, independent asset managers, commodity trading houses and other commercial clients. I am a German and Swiss attorney-at-law, also admitted as a solicitor in England & Wales and in Hong Kong. I divide my time between Zug in Switzerland, Singapore and Hong Kong. Since 2017 I have advised international clients on more than 700 crypto and digital asset projects. I also have extensive experience in cross-border litigation and arbitration in Singapore, Hong Kong and other markets in South-East Asia and Greater China.

I operate across the key financial centres in South-East Asia, the Middle East and Switzerland, with a particular focus on asset protection, international tax and estate planning, as well as trusts, company administration and other fiduciary services. My philosophy is to serve as a trusted advisor working closely with my clients and to help them achieve their commercial objectives.

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KGP Legal LLC is a medium-sized law firm in Singapore that is capable of providing the full range of legal services and corporate administration work. Please contact me directly at [email protected] if you need any further information.

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SingaporeIQ is edited by Dr Alexander Ressos, an international business lawyer with more than 15 years of local experience in Singapore as a permanent resident, a Singapore registered foreign lawyer and managing partner of a Singapore foreign law practice. In addition to significant experience in cross-border investments and transactions, UHNWI private client work and sanctions/export controls, Dr Ressos has extensive experience in cross-border business and in crypto and digital-asset projects in Singapore, drawn from more than 700 projects since 2017.

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