Japan's Crypto Regulations Take Shape Under FIEA

Japan's regulatory approach to cryptocurrencies began in 2017, when it recognized Bitcoin as a legal payment method. This move brought exchanges under anti-money laundering (AML) and know-your-customer (KYC) rules.

The law was introduced after the collapse of Mt. Gox in 2014, which lost 850,000 BTC and led to a debate about regulating cryptocurrencies. Many people in Japan distrusted Bitcoin due to its association with Mt. Gox, which they believed was representative of the entire cryptocurrency market.

The Payment Services Act (PSA) was amended to include virtual currencies as assets that could be used to pay for goods and services. Exchanges had to register with the Financial Services Agency (FSA), meet capital, cybersecurity, and operational requirements, run employee training programs, and submit to annual audits.

The regulatory framework continued to evolve in response to major hacks, including those on Coincheck, Zaif, and DMM Bitcoin. In 2026, a law passed placing crypto under the Financial Instruments and Exchange Act (FIEA), adding insider-trading bans, disclosure rules, and firmer action against unregistered operators.