Japan remains one of the most progressive countries when it comes to cryptocurrency. As of 2025, the nation continues to embrace innovation while enforcing strong regulations to ensure investor protection and financial stability.
Regulatory Landscape
Japan was one of the first major economies to recognize cryptocurrency as legal property under the Payment Services Act (PSA). The Financial Services Agency (FSA) oversees the industry and enforces strict registration requirements for crypto exchanges. This regulatory framework ensures a high level of transparency and accountability compared to many other countries.
In 2023 and 2024, Japan tightened its anti-money laundering (AML) rules in line with global Financial Action Task Force (FATF) standards. All exchanges are now required to comply with the Travel Rule, which mandates the tracking of transaction details for transfers above a certain threshold.
Licensed Exchanges
Only government-registered exchanges are legally allowed to operate in Japan. These include both domestic platforms and foreign companies that have established local entities. Well-known licensed players such as bitFlyer, Coincheck, and Liquid continue to dominate the market, with newer entrants focusing on user experience and regulatory compliance.
Most Popular Cryptocurrencies in Japan
Japanese investors tend to favor well-established, highly liquid cryptocurrencies. The most widely used and traded cryptocurrencies in Japan include:
Bitcoin (BTC): Still the most dominant and trusted cryptocurrency for both trading and long-term holding.
Ethereum (ETH): Popular for smart contracts, NFTs, and DeFi applications.
XRP (Ripple): Favored for cross-border payments, especially after Ripple Labs’ ongoing global expansion.
Polygon (MATIC): Increasingly used for low-cost transactions and DeFi.
Cardano (ADA): Gaining traction for its focus on sustainability and academic development.
Shiba Inu (SHIB) and Dogecoin (DOGE): While more speculative, these meme coins enjoy a strong following among younger investors.
Japanese exchanges only list cryptocurrencies that pass strict screening by the FSA. This means highly volatile or unverified tokens are generally not available, promoting a safer environment for retail investors.
Taxation
Cryptocurrency earnings are classified as “miscellaneous income” under Japanese tax law. Individuals are taxed progressively, with rates ranging from 5% to 45%, depending on their income bracket. In 2024, there were proposals to simplify and lower taxes on long-term crypto holdings and DeFi-related gains, but no major reforms have been implemented yet.
Adoption and Use
Cryptocurrency in Japan is primarily viewed as a digital asset rather than a means of payment. However, interest in Web3, NFTs, and metaverse-related projects is steadily increasing. Major corporations—including Rakuten and Sony—are integrating blockchain technologies into their ecosystems.
The Bank of Japan (BoJ) is also actively testing a Central Bank Digital Currency (CBDC), known as the Digital Yen, which remains in the pilot phase as of mid-2025.
Investor Sentiment
Japanese investors are cautious yet optimistic. Following past incidents involving exchange collapses (such as Mt. Gox and FTX), trust has shifted toward regulated platforms and transparent projects. Educational initiatives and consumer protection efforts are expanding, particularly in combating scams and phishing attacks.
Key Takeaways
* Japan is a global leader in crypto regulation and investor protection.
* Only FSA-registered exchanges can legally operate.
* Bitcoin, Ethereum, and XRP are the most popular cryptocurrencies.
* Crypto earnings are taxed as miscellaneous income with progressive rates.
* The BoJ is piloting the Digital Yen.
* Interest in Web3, NFTs, and blockchain adoption continues to grow.