Japan’s crypto regulation is undergoing a major transformation in 2026. The amended Payment Services Act took full effect in July, establishing a legal framework for stablecoins. This article summarizes the latest regulatory developments and future outlook.

Full Enforcement of the Amended Payment Services Act

The revised Payment Services Act, fully enforced in July 2026, tightens registration requirements for crypto asset exchange service providers and introduces a new registration system for stablecoin issuers. Stablecoins issued in Japan must now be fully backed by fiat currency such as the yen, with regular audits and trust-custody arrangements mandated for issuers.

Strengthened Segregation of Customer Assets

The amended law requires complete segregation of customer assets from proprietary assets at crypto exchanges. In addition to existing trust-custody requirements, exchanges must disclose the ratio of assets held in cold wallets and clarify procedures for asset return in the event of bankruptcy. These measures ensure stronger protection of customer assets even if an exchange fails.

Separation of Proprietary Trading and Custody

New regulations mandate that exchanges clearly separate their customer order execution operations from proprietary trading desks. This conflict-of-interest prevention measure enhances exchange transparency and strengthens investor protection.

Future Outlook

Further tax reforms for crypto assets are expected from 2027 onward, including review of unrealized gains taxation and potential tax deferral for crypto-to-crypto trades. The Bank of Japan’s CBDC pilot program is also progressing toward full-scale implementation in 2027. Regulatory clarity is expected to foster healthy development of Japan’s crypto asset market.