Remote VASP serving residents in Japan
Foreign-incorporated entity that offers exchange, custody, or transfer services to residents of a jurisdiction without establishing a local entity or office.
Remote VASP is conditionally permitted in Japan with a local entity, subject to AML obligations and high licensing burden.
Verdict Details
- Permitted
- conditional
- Local entity required
- Yes
- Licensing burden
- High
- Last updated
- 2026-07-13
AML Obligations
- Full KYC/CDD procedures required under PSA and FIEA — aligned with FATF recommendations
- Suspicious Activity Reporting (SAR) obligations to FSA
- Transaction monitoring obligations for all crypto-asset exchange services
- Travel Rule applies with zero-threshold (JPY 0) — originator and beneficiary information must be transmitted for all transfers
- No de minimis threshold for AML obligations — all transactions covered
Key Restrictions
- Must be registered as a VASP (Crypto-Asset Exchange Service Provider) with the FSA — CAESP registration
- Must incorporate a local entity in Japan — no provision for foreign-entity licensing; a Japanese-registered entity is required
- Must hold minimum capital of JPY 10M (~$70K USD) and maintain positive net assets
- Mandatory JVCEA (self-regulatory organization) membership
- 100% cold storage recommended for customer assets; customer asset segregation required (trust account or equivalent)
- Token listings must be pre-screened by JVCEA (green/white list)
- Margin trading capped at 2x leverage
- 6–18 month application timeline for licensing
Key Risks
- Enforcement risk is significant — FSA has power to issue administrative orders, impose penalties, and revoke licenses for unregistered operation
- Operating without a license (unlicensed remote VASP) is illegal and exposes the operator to enforcement action, cease-and-desist orders, and potential criminal liability
- FSA actively monitors for unregistered cross-border services and has taken enforcement actions against foreign exchanges (e.g., Binance warning in 2021, 2023)
- The zero-threshold Travel Rule imposes compliance costs on every transaction, including foreign-to-Japan transfers
- Tax reporting obligations to the National Tax Agency (NTA) also apply, creating dual regulatory exposure
Evidence
This verdict synthesizes the following facts. Each fact links to its primary source(s).
FSA/JFSA — CAESP registration, exchange oversight, stablecoin regulation, policy development
JVCEA — Mandatory self-regulatory organization — token listing standards (green/white list), operational rules, member monitoring
Payment Services Act (amended 2017, 2020) (2017) — CAESP registration, crypto-asset definition, customer asset segregation
VASP: CAESP registration with FSA. JPY 10M (~$70K USD) minimum capital. Must maintain positive net assets. 100% cold storage recommended for customer assets. JVCEA membership mandatory. 6-18 month application timeline. Token listings pre-screened by JVCEA.
EXCHANGE: CAESP registration required. Margin trading capped at 2x leverage. Stablecoin intermediation requires separate fund transfer service provider registration.
Licensing Requirement: Mandates that all entities operating "Crypto-Asset Exchange Services" (which include buying/selling, exchanging, intermediating, managing, or transferring crypto-assets for others) must register with and obtain a license from the FSA.
Core Requirements for Licensed Exchanges (VCEPs):
Anti-Money Laundering (AML) & Counter-Terrorist Financing (CFT): Comprehensive Know Your Customer (KYC) procedures, transaction monitoring, and suspicious activity reporting (SAR) obligations. These align with FATF recommendations.
Travel Rule adopted — threshold: JPY 0 (no threshold)
FSA announcement and implementation: https://www.sygna.io/blog/japan-implements-fatfs-crypto-travel-rule/; https://www.fsa.go.jp/en/news/2025/20250625/01.pdf
Regulator: Financial Services Agency (FSA).
Regulator: National Tax Agency (NTA).
Verdict Attribution
- Source:
- AI-Generated · Unreviewed
- AI synthesized:
- 2026-07-13 (deepseek-chat)
- Last updated:
- 2026-07-13
- Confidence:
- high
This verdict was produced by an AI model from the underlying facts. Confirm with counsel before relying on it for material decisions.
Conditional — a remote VASP cannot serve Japanese residents from abroad without a local entity; it must incorporate in Japan, obtain CAESP registration from the FSA, join JVCEA, meet capital/security/AML requirements, and comply with a zero-threshold Travel Rule; unlicensed cross-border operation carries substantial enforcement risk.
Questions this verdict aims to answer
- May a non-resident provider serve residents from abroad?
- Does cross-border service trigger licensing, registration, or AML obligations?
- What enforcement risk exists for unlicensed remote operators?