Cryptocurrency in Japan - statistics & facts
Japan's cryptocurrency market and its early stages
Spot trading on cryptocurrency exchanges in Japan reached around 28.5 billion Japanese yen in the fiscal year 2021. Leverage trading declined to 37.2 trillion yen, down from a record 97.4 trillion yen in the previous year. The number of cryptocurrency investors in Japan has grown steadily in recent years. There were around 3.7 million active crypto asset accounts as of the end of 2022.As an early adopter of cryptocurrency, Japan became a global center of the crypto industry in its initial stages. The crypto boom in 2017 led to rapid growth in the industry, with many new crypto exchanges emerging in a largely unregulated environment.
Regulations concerning crypto assets were introduced as early as 2016 following the collapse of Mt. Gox, one of the world’s largest crypto exchanges at the time, after a major hacking incident in 2014. A similar incident occurred in 2018 when Coincheck was hacked, and billions of Japanese yen in crypto assets were stolen. The incidents prompted Japan’s financial regulator, the Japan Financial Services Agency (FSA), to introduce stricter rules for the industry.
Cryptocurrency regulations
Following the Mt. Gox incident, Japan passed the first legal framework on cryptocurrency in 2016. In 2018, a self-regulatory body, the Japan Virtual and Crypto-assets Exchange Association (JCVEA), was established to oversee the industry. Further legal reform was passed in 2019 and 2022. Crypto exchange operators in Japan need to register with the FSA and follow strict rules regarding asset storage and capital requirements. Japan does not consider cryptocurrency legal tender but accepted it as a means of payment in 2016. Around 100,000 merchants in Japan were believed to accept cryptocurrency in 2022.While Japan can be considered a forerunner in regulating cryptocurrencies and protecting consumers, the tightened regulations of recent years are also perceived to have slowed growth in the industry and affected the profitability of exchange operators. This shows, for example, in the fact that Japanese crypto exchanges offer far fewer coins than their overseas counterparts and that margin trading has declined significantly due to new restrictions on the maximum leverage allowed.