What Does Stripe's Guide Cover?
Stripe provides a practical breakdown of Japan's Payment Services Act requirements for businesses providing payment services in Japan. The guide covers the regulatory framework, licensing categories, and compliance obligations relevant to both traditional payment services and emerging digital asset activities.
What License Types Exist Under the PSA?
Fund Transfer Service Provider
- For remittance and money transfer services
- Tiered based on transaction amounts
- Type I, II, and III categories
- Capital and operational requirements vary by type
Electronic Payment Method Service Provider
- New category for stablecoin intermediaries
- Covers trading, exchange, and custody of stablecoins
- Registration with FSA required
- Distinct from crypto-asset exchange service providers
What Is the Registration Process?
Application Requirements
- Japanese corporate entity or foreign company branch
- Minimum capital requirements
- Business plan and operational documentation
- Compliance program documentation
- Fit and proper management assessment
FSA Review
- Completeness check of application materials
- Assessment of operational capability
- Compliance infrastructure review
- Ongoing dialogue during review process
What Are the Key Compliance Obligations?
AML/CFT Requirements
- Customer identification and verification
- Transaction monitoring
- Suspicious activity reporting
- Sanctions screening
- Record-keeping requirements
Operational Standards
- Asset safeguarding measures
- Information security management
- Business continuity planning
- Customer complaint handling
- External audit requirements
Consumer Protection
- Clear disclosure of terms and fees
- Information provision in Japanese
- Prohibition on unfair practices
- Advertising standards compliance
How Do Stablecoins Fit In?
Framework Overview
- Stablecoins treated as "electronic payment methods"
- Issuance restricted to banks, trust companies, and fund transfer providers
- Intermediaries need EPMSP registration
- Different treatment from crypto-assets
Intermediary Obligations
- Segregation of customer stablecoins
- Disclosure of issuer information
- Risk warnings for users
- Transaction record-keeping
What Should Financial Institutions Consider?
- Japan's strict approach requires substantial compliance investment
- Local presence requirements may necessitate partnership strategies
- Bank-only issuance model favors established institutions
- Intermediary opportunities for non-bank entities
- Consumer protection focus shapes product design
The Coinbax Perspective
Stripe's practical perspective is valuable: it shows how a major payment company navigates Japan's regulatory requirements. The guide demonstrates that compliance is achievable but requires careful planning and investment.
For financial institutions, the key insight is that Japan's framework, while strict, creates opportunities for entities with existing compliance infrastructure. The EPMSP category allows non-issuers to participate in the stablecoin market through intermediary services.
Frequently Asked Questions
Do I need a local entity to operate in Japan?
Generally yes. Most PSA licenses require either a Japanese corporation or a registered foreign company branch with local presence.
How do stablecoins differ from crypto-assets under Japanese law?
Stablecoins are classified as "electronic payment methods" with different issuer restrictions and regulatory treatment than crypto-assets, which are regulated under the separate crypto-asset exchange framework.