Payment Services Act (Japan)

The Payment Services Act (Act No. 59 of 2009) is the Japanese statute that regulates payment businesses outside the banking system, and since 2017 it has been the legal basis of Japan's crypto-asset and stablecoin regulation. Amendments in 2016, 2019, 2022 and 2025 added a registration regime for crypto exchanges, tightened custody rules after a major exchange hack, created a category of "electronic payment instruments" for yen- and foreign-currency-linked stablecoins, and added a licence for intermediaries. The Financial Services Agency (FSA) supervises the regime.¹²³ A further amendment passed by the Diet in July 2026 will move the regulation of crypto-assets out of the Act and into the Financial Instruments and Exchange Act.⁴⁵

BackgroundReport an error

The Act of 2009 regulates prepaid payment instruments, funds transfer services by persons other than deposit-taking institutions, and the clearing of exchange transactions between such institutions. Its stated aim is to ensure that payment services are appropriately provided and users are protected.¹

Crypto-assets entered the Act after the collapse of the Mt. Gox exchange. The FSA names the Mt. Gox incident (about US$480 million) as the trigger for the first legal reform of 2016, alongside the G7 Elmau Summit leaders' declaration and the Financial Action Task Force guidance of June 2015, both of which called for registration or licensing of virtual currency exchanges.²

Legislative historyReport an error

2016 amendment: virtual currency exchanges

The 2016 amendment of the Payment Services Act and of the Act on Prevention of Transfer of Criminal Proceeds was enforced in April 2017. It introduced a registration system for virtual currency exchange service providers, identity verification on account opening, and user-protection requirements covering minimum capital, provision of information to customers, segregation of assets and system security.² From 1 April 2017 only businesses registered with the competent Local Finance Bureau could operate such a service. The FSA reported that as of the end of September 2017, 11 applicants were registered and 19 were under examination.⁶

2019 amendment: crypto-assets and custody

In January 2018 a large exchange was hacked and a significant amount of customers' virtual currency was lost, according to the law firm K&L Gates. On-site FSA inspections that followed found that many exchanges' internal management and operating systems were insufficient.⁷ The FSA identifies the incident as the Coincheck incident (about US$530 million).² An FSA study group met 11 times between April and December 2018 and reported in December 2018.²⁷

The Diet passed the resulting bill, amending the Payment Services Act and the Financial Instruments and Exchange Act, on 31 May 2019, and it was promulgated on 7 June 2019.⁷ The FSA gives May 2020 as the date it was enforced.² Its main changes were:⁷

• The term "virtual currency" in the Act was renamed "crypto-assets" (angō shisan), to follow more widely used international terminology.
• Holding crypto-assets on behalf of clients was added to the regulated crypto-asset exchange business, so custodians had to register.
• Crypto-asset margin trading and other derivatives were brought under the derivatives rules of the Financial Instruments and Exchange Act.
• Rights recorded or transferred on a distributed ledger, such as many token offerings, were brought into the securities regime as "electronic recording transfer rights".
• Market manipulation and other unfair trading practices involving crypto-assets were prohibited. K&L Gates notes that the amendment did not include an insider-trading prohibition, because FSA officials said it was difficult to identify the issuer of a crypto-asset or the information material to its price.

The FSA describes the requirements for registered exchanges after this reform as including keeping at least 95 per cent of users' crypto-assets offline, managing users' money in a trust, segregating assets, and handling only crypto-assets reviewed by a self-regulatory organisation and notified to the FSA.² The English text of the Act defines crypto-assets as property value that can be used with unspecified persons to pay for goods or services and can be bought and sold with unspecified persons, or that can be exchanged for such property, and that can be transferred by electronic data processing. The definition excludes yen, foreign currencies and currency-denominated assets.¹

2022 amendment: stablecoins

The stablecoin amendment was promulgated on 10 June 2022 as the Act Partially Amending the Payment Services Act, and its Cabinet Orders and Cabinet Office Orders were finalised on 26 May 2023 and enforced on 1 June 2023.⁸ The FSA presents it as the third legal reform of the regime, prompted by the wider use of stablecoins abroad and by the Financial Stability Board's high-level recommendations. It also amended the Banking Act and the Trust Business Act.²

Clifford Chance, writing in June 2022, tied the framework to the international discussion that followed the announcement of the Diem (Libra) project, and noted that the collapse of TerraUSD in May 2022 had sharpened regulators' calls for a dedicated framework. It also noted that Japan chose to allow private firms to issue stablecoins rather than pursue a central bank digital currency.⁹

2025 amendment: intermediaries

The Act Partially Amending the Payment Services Act was enacted in June 2025 as Act No. 66 of 2025.¹⁰⁴ It extended payment regulation to businesses providing cross-border payment collection services.¹⁰ Chambers reports that a bill submitted to the Diet in March 2025 created a licence for businesses that only intermediate trades in crypto-assets or electronic payment instruments, on the ground that full registration as an exchange service provider was considered excessively stringent for them.³ The FSA promulgated Cabinet Order and Cabinet Office Orders implementing the amendment on 22 May 2026. They covered provisions on electronic payment instruments and crypto-assets, funds transfer services, and banks and insurers and their subsidiaries.¹¹ This article could not confirm an official effective date for the intermediary licence as of October 2026.

2026 amendment: moving crypto-assets to the Financial Instruments and Exchange Act

The Cabinet approved the Bill for Partially Amending the Financial Instruments and Exchange Act and the Payment Services Act on 10 April 2026 and submitted it to the 221st session of the Diet. Anderson Mori & Tomotsune describes four pillars, the first being a review of crypto-asset regulation. The bill builds a disclosure regime, business regulation and unfair-trading rules for crypto-assets in the Financial Instruments and Exchange Act, deletes the provisions on crypto-asset exchange service providers from the Payment Services Act, and deletes the crypto-asset intermediary provisions introduced by the 2025 amendment. Regulation of crypto-asset transactions would then be centralised under the Financial Instruments and Exchange Act, with many details left to subordinate legislation.⁴

The House of Councillors approved the bill at a plenary meeting on 15 July 2026.⁵¹² The Adnkronos report states that unregistered crypto traders face up to 10 years in prison and a fine of 10 million yen, up from three years and 3 million yen, and that the law adds rules against insider trading in crypto-assets.⁵ CoinDesk reported that the new rules were expected to take effect in 2027, and that lawmakers also approved a framework for a flat 20 per cent tax rate on crypto income, not expected to apply before 2028.¹² This article could not confirm an exact commencement date as of October 2026. The Anderson Mori summary describes deletions limited to crypto-asset provisions.⁴

ProvisionsReport an error

Role of the Financial Services Agency

The Act delegates the Prime Minister's authority under it to the Commissioner of the Financial Services Agency, who may delegate part of it to the heads of Local Finance Bureaus.¹ Registration of a crypto-asset exchange service provider is made with the Prime Minister, and no one may provide the service without it.¹ The FSA also publishes the implementing orders and the guidelines, and its officials have presented the regime to international bodies as covering financial stability, user protection and anti-money-laundering as three priorities.²

Crypto-assets other than stablecoins

Until the 2026 law takes effect, crypto-asset exchange service providers must register under the Act. The English text defines the regulated service as purchase, sale or exchange of crypto-assets, intermediary, brokerage or agency services for those acts, management of users' money in connection with them, and management of crypto-assets on behalf of another person.¹ The FSA's summary of the user-protection regime is given under the 2019 amendment above.²

Electronic payment instruments

The 2022 amendment treats currency-linked stablecoins as "electronic payment instruments". Clifford Chance quotes the definition as currency-denominated assets that can be used for remittance and settlement to unspecified persons and transferred using an electronic information processing organisation. The amendment does not require a distributed ledger.⁹ Chambers reports that stablecoins redeemable for fiat currency are regulated as electronic payment instruments, while stablecoins not backed by fiat currency, such as DAI, continue to be treated as crypto-assets.³

Who may issue

Issuance in Japan is limited to licensed banks, funds transfer service providers and trust companies.⁹² The FSA states that each route carries its own redemption protection:²

• Banks may issue stablecoins as deposits, covered by deposit insurance in the same way as other deposits.
• Funds transfer service providers may issue them as claims, and must secure the obligation through deposits with official depositaries, bank guarantees or entrusted safe assets such as bank deposits and government bonds.
• Trust companies may issue them as trust beneficiary rights, and must hold all trust assets as bank deposits.

Chambers reports that stablecoins issued under the Type II funds transfer service provider licence are subject to a cap of 1 million yen per issuance or redemption transaction.³ SBI states that its trust-bank stablecoin is not subject to the 1 million yen transaction and balance limits that apply to funds transfer type stablecoins.¹³

Intermediaries

Clifford Chance observed that before the amendment, issuance was already restricted but the transfer and management of stablecoins were not regulated. The amendment added a licence for intermediaries, bound by anti-money-laundering codes of conduct.⁹ The FSA says intermediaries must register as electronic payment instrument exchange service providers. It describes requirements to contract with issuers on sharing liability for losses and, subject to points it described in December 2022 as still under consideration, not to deal in stablecoins unless they have clear transfer rules, meet anti-money-laundering requirements and offer protections in an issuer's failure.² The FSA's 2023 notice of the final orders adds that these intermediaries become "specified business operators" under the criminal proceeds law, and that a travel rule applies to transfers of stablecoins and crypto-assets.⁸

Algorithmic stablecoins

Clifford Chance reports that stablecoins that stabilise value through algorithms fall outside the electronic payment instrument framework and continue under the rules for crypto-assets and security tokens.⁹ The FSA's December 2022 presentation said that self-described stablecoins such as algorithmic ones, naming Terra, and non-redemption ones, naming DAI, were categorised in the same regulatory category as Bitcoin in Japan.² See Terra.

Foreign stablecoins

Clifford Chance noted in 2022 that intermediaries were not expressly barred from dealing in stablecoins issued overseas. It reported that an FSA working group had suggested the overseas issuer should maintain assets in Japan matching the stablecoins distributed there, which would make use of foreign stablecoins difficult if adopted, and that other investor-protection measures could substitute.⁹ Whether specific foreign stablecoins would be allowed was left to subordinate legislation. In May 2026 the FSA promulgated a Cabinet Office Order amendment that widened the scope of foreign trust beneficial interests treated as electronic payment instruments.¹¹

ImplementationReport an error

JPYC

JPYC Inc. was reported to have registered as a funds transfer service provider with the FSA in August 2025 and to have launched a yen stablecoin, JPYC, on 27 October 2025.¹⁴ The Block, reporting Nikkei in August 2025, said the FSA was expected to approve the token.¹⁵ The company says it holds 100 per cent reserves in yen deposits and Japanese government bonds, and The Block described it as the country's first legally recognised yen-backed stablecoin.¹⁴ Crypto Briefing reported in October 2026, citing an interview, that the company's chief executive, Noritaka Okabe, said the amount outstanding was well below internal targets and pointed to the 1 million yen per-transaction limit as a source of friction for businesses.¹⁶

USDC and SBI VC Trade

On 4 March 2025 SBI VC Trade announced that it had completed registration to handle USDC, which the company described as the first in the country, with a beta for selected users from 12 March.¹⁷ Decrypt reported on 25 March 2025 that USDC had received approval earlier in the month as the first token of its kind approved under Japan's stablecoin framework, with trading on SBI VC Trade due to begin on 26 March and Binance Japan, bitbank and bitFlyer planning to follow.¹⁸

SBI's JPYSC

SBI Group and Startale launched JPYSC on 24 June 2026. SBI Shinsei Trust Bank issues it and SBI VC Trade distributes it. SBI says it is the first stablecoin of its kind classified as an electronic payment instrument under the Act, and availability is limited to SBI VC Trade accounts until its regulatory and tax treatment is clarified.¹³

Megabank project

On 10 June 2026 MUFG, SMBC and Mizuho said in a joint statement that they plan to issue a stablecoin under a trust arrangement, with the banks as joint settlors and a trust bank as trustee, and aim for live commercial transactions during fiscal year 2026, which ends in March 2027. The FSA backed the project in November 2025 as a test of whether it can operate lawfully under existing rules, within its FinTech proof-of-concept hub. This article found no report of a launch as of October 2026.¹⁹

CriticismReport an error

JPYC's chief executive says the transaction limit on funds-transfer-type stablecoins restricts business payments.¹⁶ Anderson Mori & Tomotsune notes that the 2026 bill will impose stricter requirements and new compliance costs on crypto firms, and that many details remain to be set by subordinate legislation.⁴ The FSA itself noted in 2022 that some conditions for intermediaries were still under consideration.²

TimelineReport an error

See alsoReport an error

• Stablecoin
• GENIUS Act
• MiCA
• Stablecoins Ordinance (Hong Kong)
• USDC
• Terra

ReferencesReport an error