Best Crypto Exchanges in Japan

Crypto Exchange Essence 

If you wonder why not trading directly, using in-person transactions, but rather resorting to a crypto exchange, a number of pivotal drivers come into play. First of all, it’s not uncommon for P2P trading to be costlier than crypto exchanges. In this case, if you trade frequently and in large volumes, it makes your deals not as profitable as they might have been. Besides, crypto exchange platforms offer a wider variety of trading pairs compared to individuals who trade on their own through peer-to-peer transactions. The platform facilitates the matching of buyers and sellers so that their deals go smoothly and timely. 

The top ranking crypto exchanges provide crypto users with such opportunities as:

• simple exchange of fiat money in various crypto coins;
• more favorable prices thanks to multiple user activity;
• fast execution of large orders that is advantageous for entrepreneurs and businesses or major investors;
• lower devaluation of assets;
• improved protection of assets and regulatory compliance;
• sophisticated instruments for effective trading;
• user-friendliness and accessibility to beginners.

To summarize, a crypto exchange platform is a convenient environment with specialized features aimed to boost the efficiency of users’ crypto trading and investments as well as secure the users’ funds.  

Cryptocurrency Exchanges in Japan: Regulation and Security 

In Japan, the regulations are quite strict when it comes to controlling cryptocurrencies. The Financial Services Agency (FSA) makes sure that those who provide crypto exchange services register with it. To register, the platform needs to meet rigorous requirements, including adherence to AML and KYC. The FSA also checks the cybersecurity measures of the platform (like multiple-factor authentication) to ensure the users are safeguarded against potential money stealing when storing their funds on the platform. As a result, if the platform lives up to the high standards, the FSA can grant it a license. However, even after obtaining a license, regular audits take place to ensure the platform continues to follow the rules.

Here are several rules that Japanese crypto exchange platforms should abide by: 

1. Crypto exchange platforms operating in Japan must implement thorough KYC and AML practices. They vet the user's identity and inform the authorities if they suppose something suspicious is going on with the user's transactions. 
2. With Japan's tough privacy laws, Japanese crypto exchanges should take serious measures to protect users’ data from leaks and hacker attacks. 
3. Crypto trading platforms must store the clients’ funds separately, usually in cold offline wallets.
4. The Financial Services Agency also oversees which cryptocurrency exchanges can trade and which cannot. Only a selected few go on lists, while the rest should go through a stringent review process. On the one hand, it promotes very high standards of safety for Japanese users, while on the other hand, it significantly restricts the number of available coins.

All in all, Japan enforces strict crypto exchange regulations to protect users' assets and privacy when they buy, store, sell, or otherwise use cryptocurrency.

Crypto Taxation in Japan

Each person who earns in cryptocurrency has to report their income and file their respective taxes by the 15th of March for the prior financial year. When you generate revenues from cryptocurrencies, Japanese officials classify them under the term “miscellaneous income.” In Japan, permanent residents and non-permanent residents have different taxation scales. 

Permanent residents are subject to progressive tax rates, ranging from 5% to 45% (and 10% municipal tax is also possible). The income tax bracket determines how much you are going to pay. For instance, if you earn 1.95 million JPY per year, you’ll pay 5% tax. If you make over 40 million JPY per year, you’ll pay 45%.

Alternatively, non-permanent residents face a flat 20% tax on all cryptocurrency gains.

It is worth mentioning that all cryptocurrency transactions, even buying things or paying for services with crypto, result in the need to pay taxes. Yet, if you got free tokens via Airdrops distribution, you pay taxes only when you sell tokens, not when you procure them.

In brief, if you are a crypto investor or active crypto trader in Japan, be aware of slightly complicated taxation rules that apply to crypto earnings. To obtain the most up-to-date information, don’t forget to check official tax resources in Japan.

Selecting the Best Crypto Exchange, Japan

There are enough native crypto platforms that operate mainly on the domestic market. However, some Japanese users also favor international crypto exchanges that have gained popularity all over the globe. Despite the tough selection process, the FSA allows the most secure of trading platforms. So, if you wonder which platform to pick, let’s explore what aspects to look for in Japanese crypto exchanges in order not to make a wrong choice.

Below, we offer a useful Japanese crypto exchange list that comprises the most popular trading platforms for Japanese users.

Platform Safety

Strict regulation makes licensed Japanese exchanges some of the safest in the world. 

The majority of Japanese crypto exchanges store the majority of users’ funds in cold storage that is inaccessible to outsiders, minimizing the risk of theft. Besides, most crypto platforms impose two- or multi-factor identification to prevent unauthorized access to the account. But even if someone accesses the login info or financial details of users, crypto platforms encrypt personal data, so this data remains unintelligible to them. And finally, certain exchanges offer insurance policies to compensate for users’ losses in case of hacker attacks. 

Available Crypto

In comparison with international exchanges, crypto exchanges in Japan offer less diversity. That is because of the rigorous currency review process demanded by the FSA. Of course, it’s possible to find popular coins like Bitcoin, Litecoin, or Ethereum on Japanese crypto trading platforms. But if you’re searching specifically for alternative coins like Cardano or Stellar, only a few exchanges can meet your expectations, providing a wider variety of currencies. Thus, it’s vital to check if the cryptocurrency you wish to trade is available for trading on the crypto exchange.

Stablecoins must have an equivalently-sized amount of fiat money as backing, so they undergo even more scrutiny from regulatory authorities, making them less widely available.

Market Liquidity

Generally, the leading cryptocurrency exchanges in Japan offer high liquidity when exchanging fiat for cryptocurrency. As Japan has become one of the early adopters of digital currencies, ranking crypto platforms have amassed considerable trading volumes. The total turnover is an important metric for any crypto exchange because it demonstrates the platform's credibility. More so, market liquidity and trading volume affect prices and speed of trade execution on these platforms. The better the liquidity and trading volume, the more favorable the deals, and the faster they take place.

Operating Fees

When selecting the best crypto exchange, Japan, many users opt for exchanges with moderate fees. That’s because large fees may significantly lower your total revenue, especially if you use the exchange frequently.

Trading fees are the payment that cryptocurrency exchanges charge users who purchase or sell digital assets on their platforms. Typically, trading fees range from 0.01% to 5% of the deal value. Sometimes, maker and taker fees differ. A maker who places orders that are yet to have a match may have to pay lower fees than a taker who responds to an existing order.

Aside from trading fees, exchanges may take deposit and withdrawal fees. Usually, for Japanese users, depositing money in JPY through bank accounts is pretty cheap or even free, while credit card deposits may require some fee. Withdrawals may also involve a small commission, either when withdrawing to a bank account in yen or when transferring the cryptocurrency to another wallet.  

Topping Up and Withdrawal Methods

The convenience of payment is crucial. So, when choosing the platform, take a look at the depositing and withdrawing options they allow. The top Japanese crypto platforms allow bank transfers in JPY, replenishing accounts with payments at local convenience stores, Line Pay, and sometimes debit and credit card payments. Although, the latter method is typically costlier than the former one. If you prefer to pay with a card, you might as well use prepaid debit cards, which some platforms offer their users. Another way to deposit money is to do it via your crypto wallet outside the platform. If you prefer this option, check the supported wallets.

You can also withdraw money by bank transfer or crypto withdrawal. 

Reputational factor

The reputation of the most trusted exchanges builds on clients’ opinions. If the platform is easy to navigate, provides users with convenient functionality and helpful features, is reliable in terms of strong security measures, and has high liquidity in the coins, many people will find it alluring. A carefully structured platform will simplify your spot trading, lending, or staking a great deal, while good liquidity and robust safety measures will guarantee a secure and smooth trading experience. 

Conclusion

When exploring ranking crypto exchanges to find the best one, it’s essential to look at general indicators of a reliable platform and compare your needs with the platform’s characteristics. Strict regulations, as observed in most Japanese exchanges, indeed provide significant benefits such as the security of your digital funds and reduced price fluctuations. Those investors who prefer to speculate on the changing prices or appreciate a freer approach to trading might want to engage in less centralized exchanges.  

To summarize, the more comprehensive approach to selecting a crypto trading platform is to consider all factors, from a wide array of supported cryptocurrencies and trading pairs, expanded trading features, amounts of trading fees, and available payment methods. Also, consider general user experience.