The Japanese Financial Services Agency (FSA) has officially granted operational approval to four new cryptocurrency exchanges, marking the second wave of regulatory clearances since the country began formal registration of digital asset platforms. This latest development reinforces Japan’s position as a leader in crypto regulation, promoting a secure and transparent environment for digital currency trading.
With these additions, the total number of FSA-licensed cryptocurrency exchanges in Japan now stands at 15. The first group of 11 exchanges received approval on September 29, and the latest quartet was announced on December 1 through an official update on the FSA’s website. Only exchanges licensed by the FSA are legally allowed to operate in Japan, and their activities fall under the scope of the Payment Services Act, which came into full effect on April 1.
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Regulatory Framework: The Payment Services Act
The Payment Services Act recognizes Bitcoin (BTC) and other digital currencies as legitimate forms of payment. Under this framework, all cryptocurrency exchanges must register with the FSA to ensure compliance with anti-money laundering (AML), know-your-customer (KYC), and cybersecurity standards. This law not only legitimizes digital assets but also protects investors by mandating strict operational oversight.
By requiring formal registration, the FSA ensures that only financially sound and technically secure platforms can serve Japanese users. Licensed exchanges are subject to regular audits and must adhere to capital adequacy requirements, consumer protection protocols, and incident reporting obligations.
Newly Approved Exchanges and Their Trading Permissions
The four newly approved entities are all relatively recent entrants to the market:
- Tokyo Bitcoin Exchange Co., Ltd.
- Bit Arg Exchange
- FTT
- Xtheta
According to the FSA, three of the four — Tokyo Bitcoin Exchange, Bit Arg Exchange, and FTT — are authorized exclusively to trade Bitcoin (BTC). This limited scope reflects a cautious regulatory approach, especially for newer platforms with unproven track records.
However, Xtheta stands out as it has been granted permission to list multiple digital currencies, including:
- Ethereum (ETH)
- Bitcoin Cash (BCH)
- Ripple (XRP)
- Litecoin (LTC)
- Ethereum Classic (ETC)
- NEM (XEM)
- MonaCoin (MONA)
- Counterparty (XCP)
This broader authorization suggests that Xtheta met more rigorous technical and compliance benchmarks, enabling it to support a diversified portfolio of cryptocurrencies.
Ongoing Review of Additional Applications
The FSA continues to evaluate several pending applications from other market participants. As of late September, Nikkei reported that 17 companies were "under review" following the initial round of approvals. However, 12 firms failed to meet the FSA’s stringent registration criteria and have since ceased operations.
One notable applicant currently under scrutiny is Coincheck, Japan’s second-largest cryptocurrency exchange by historical trading volume. On December 8, Coincheck issued a public statement confirming that its application for registration as a "crypto asset trading service provider," submitted on September 13, remains under review.
Despite the ongoing evaluation, Coincheck reassured its users:
“We remain fully capable of providing our services as usual.”
This indicates that while final approval is pending, the exchange continues to operate under temporary measures permitted during the review process.
Strengthening Oversight: Monitoring and Compliance Policies
In November, the FSA released a comprehensive policy document outlining its regulatory approach toward cryptocurrency trading and initial coin offerings (ICOs). The guidelines detail how the agency intends to supervise market activities, prevent market manipulation, and ensure investor protection.
Notably, the FSA has already begun active monitoring of the 11 exchanges approved in September. This includes real-time transaction surveillance, periodic financial inspections, and mandatory reporting of security breaches or system outages.
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Why Japan’s Crypto Regulation Matters Globally
Japan’s structured and transparent regulatory model serves as a benchmark for other nations navigating the complexities of digital finance. By balancing innovation with investor safeguards, the FSA sets a precedent for responsible crypto adoption.
Key benefits of Japan’s approach include:
- Consumer protection through mandatory insurance and cold storage requirements.
- Market integrity via strict licensing and continuous monitoring.
- Legal clarity, allowing businesses to plan long-term strategies with confidence.
- International credibility, attracting global investors seeking compliant markets.
Frequently Asked Questions (FAQ)
Q: What does FSA approval mean for a cryptocurrency exchange?
A: FSA approval means the exchange meets Japan’s legal, financial, and security standards for operating a digital asset platform. It allows them to legally offer services to Japanese residents and enhances user trust.
Q: Can unlicensed exchanges still operate in Japan?
A: No. Only FSA-registered exchanges may legally provide crypto trading services in Japan. Unlicensed platforms must cease operations or face enforcement actions.
Q: Why are some exchanges only allowed to trade Bitcoin?
A: The FSA may limit trading permissions based on an exchange’s risk profile, technical infrastructure, and compliance readiness. Newer or smaller platforms often start with BTC-only access.
Q: Is my money safe on an FSA-approved exchange?
A: While no system is 100% risk-free, FSA-regulated exchanges must follow strict custody rules, maintain sufficient capital reserves, and report security incidents — significantly reducing potential risks.
Q: How does Japan regulate ICOs?
A: ICOs fall under securities laws if they resemble investment contracts. Projects must comply with disclosure requirements and may need to register depending on their structure.
Q: Will more exchanges be approved in 2025?
A: Yes. The FSA has confirmed it is actively reviewing additional applications, and further approvals are expected throughout 2025 as firms meet regulatory standards.
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Conclusion
The approval of four new cryptocurrency exchanges underscores Japan’s commitment to building a secure, compliant, and forward-thinking digital asset ecosystem. With clear regulations, active oversight, and a phased licensing approach, the FSA is fostering innovation while protecting consumers.
As global interest in digital currencies grows, Japan’s model offers valuable insights into how governments can support blockchain technology without compromising financial stability. For investors and traders, operating within an FSA-regulated environment means greater transparency, accountability, and peace of mind.
The journey toward a fully integrated crypto economy continues — and Japan is leading the way with careful planning and strategic regulation.