Japanese versus overseas exchanges
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 6 min
In short
Japanese exchanges must register with the FSA and are built around yen deposits and Japanese-language support. Overseas exchanges list more assets and offer more features, but many are not registered in Japan, leaving the user carrying the risk if something goes wrong and the burden of tax and paperwork. It is not a question of which is better, but of what you are taking on.
Key points
- Japanese operators must be FSA-registered, and the register is public
- Overseas venues list more and offer more, but can sit outside Japan's user-protection framework
- Direct yen deposits assume a Japanese exchange; reaching an overseas one means sending crypto
- Tax filing obligations apply to Japanese residents regardless of which exchange is used
Definition
A domestic exchange is an operator registered with Japan's FSA as a crypto asset exchange service provider under the Payment Services Act; an overseas exchange is one operating under another jurisdiction.
On the regulatory side the distinction is clean. Operating a crypto exchange business in Japan requires registration with the FSA, and registered operators carry duties such as segregating customer assets and disclosing information. Anyone can check the register the FSA publishes. Unregistered operators are not permitted to solicit Japanese residents, and warnings are sometimes issued against those that do.
In day-to-day use, Japanese exchanges handle yen deposits and withdrawals, run in Japanese, and commonly issue annual transaction statements suited to a Japanese tax return. Their listings, though, are narrow compared with the large overseas venues. Domestic names include bitbank, bitFlyer, Coincheck, GMO Coin and SBI VC Trade, each with different listings and features.
Overseas venues such as Binance, Bybit and OKX list an order of magnitude more assets and typically add futures, derivatives and copy trading. Whether a Japanese resident may use them, however, varies by service and by period: some have obtained registration through a Japanese entity and some have not. If you are considering one, the starting point is confirming whether it accepts Japanese residents and what its registration status is.
The practical difference shows up when something goes wrong. With a registered domestic operator there is a support desk in Japanese, an industry body to complain to, and regulatory supervision behind it. With an unregistered overseas operator, a frozen account or a halted withdrawal is unlikely to find a remedy under Japanese rules — and language and time zones compound the problem.
Tax is where misunderstanding is most common. Profits earned by a Japanese resident are reportable regardless of whether the trading happened at home or abroad. Overseas exchanges rarely issue statements in a Japanese format, so you end up compiling the history yourself. Factor that in. 'Crypto and tax basics' has the detail.
Watch out for
- · Unregistered operators sometimes market in Japanese. Japanese-language support is no evidence of Japanese registration
- · Funding an overseas exchange means sending crypto, which cannot be reversed. Always start with a small test transfer
- · Treat DMs offering to open an overseas account for you, or to trade on your behalf, as a scam. They are often referral-fee driven, or the operator does not exist at all
Frequently asked questions
Is using an overseas exchange illegal?
It is not as simple as the user being penalised, but soliciting Japanese residents without registration is not permitted. Before using one, you need to check for yourself whether the service accepts Japanese residents and what its registration status is.
Can I hold accounts both in Japan and overseas?
It is possible, but every extra account is another set of security settings to manage and makes compiling your trade history harder. A sensible order is to get comfortable domestically first and consider it only once you have a clear reason.