After sharing the article (Web3 practitioners relocating to Japan and local life) last time, although it was repeatedly explained that many peers living and working in Japan do not engage with the Japanese market, many friends still want to understand the specific situation of Japanese users and the industry.
It was later discovered that research and materials on Japan's Web3 market in the Chinese-speaking community were relatively lagging, prompting the decision to update a research summary on the Japanese market.
This article references data and information from the Japan Crypto Asset Association, the Financial Services Agency, compliant exchanges, etc., for research and reference purposes only.
The main content of this article covers:
Japan's Web3 market (growing user base)
Japan's crypto market size and growth rate (opportunity?)
Investor user profile (not playing on-chain?)
Government regulation (attitude towards non-compliant offshore exchanges?)
Controversy over tax rates (increase or decrease?)
How project parties operate (legal risks?)
I hope the above content is helpful to you. ❤️
Japan's Web3 market
Overall, although Japan is one of the more developed countries in Asia with a population of 124 million, the number of young people is gradually decreasing. With the extreme prosperity of local stock markets, real estate, anime culture, and tourism, people's attention has become very scattered, which reduces the motivation of young people to pay attention to crypto, leading to a majority of middle-aged participants.
However, due to global promotions and the popularity of cryptocurrencies, the local participation in crypto in Japan is also accelerating, and by May 2025, the user scale and trading volume reached new highs.
Characteristics: 12.41 million user base, main participants are middle-class individuals aged 30-40, wealth management type, long-term allocation rather than pure speculation, with the majority having an annual income below 7 million yen (320,000 RMB), and high crypto profit tax (most are holding without selling, waiting for the 2026 tax reduction policy).
Japan's crypto market size and growth rate
In 2022, the spot trading volume of compliant exchanges across Japan was only about 1 trillion yen (approximately 6.8 billion USD), and in 2023, it rose to 1.13 trillion (approximately 7.6 billion USD), growing by only about 13%.
However, by 2024, when Bitcoin began to be fully embraced by Wall Street, the total spot trading volume across Japan immediately surged to 2.06 trillion yen (approximately 140 billion USD), with a year-on-year growth rate of 82%, finally becoming a sizable market.
In terms of trading varieties: Bitcoin (BTC) accounts for about 70%, while Ethereum (ETH) only accounts for about 14%. This also leads many compliant exchanges in Japan to primarily promote buying BTC, for example, Tiktok often features advertisements for Bitcoin from exchanges.
Additionally, since 2024, the popularity of XRP has slightly surpassed that of ETH.
The crypto market with 12.41 million users
Although this data may seem acceptable, with at least 12.41 million crypto users, in reality, this growth only began from 2024.
In 2022, the scale of crypto users in Japan was only 5.61 million; in 2023 it was 6.46 million, with a growth rate of only 15%; but by 2024, this number surged to 9.17 million, a growth rate of 41%.
Currently, by May 2025, the number of crypto users in Japan has reached 12.419 million. Therefore, the Japanese crypto market is also witnessing accelerated growth in local users, with custody amounts exceeding 4.26 trillion yen (approximately 27.5 billion USD).
Investor user profile
As of May 2025, the number of crypto users in Japan has reached 12.41 million, accounting for about 15% of the adult population in Japan.
Among them, the main investors are middle-class individuals aged 30-40, characterized by:
Heavily reliant on YouTube, X, and other social media
Has a certain level of stable income
Annual income below 7 million yen
In terms of investment behavior and motivation:
Wealth management type, long-term allocation, not speculative
Mostly small-scale participation, operated through exchange apps
Trading frequency is relatively low, with most users only placing orders a few times a year
On-chain native players, only a very small group
Therefore, overall, the crypto user base in Japan is gradually becoming more mainstream, but they prefer safety and convenience.
This has also led to the fact that most project parties and exchanges in Japan have found that advertising in the media is not as effective as collaborating with influencers on YouTube and X for long-term partnerships. Therefore, the Japanese crypto community has also become a place where everyone becomes an influencer, and the media is increasingly under pressure.
Regulatory environment
Japan's crypto regulatory model is quite similar to that of the United States, involving a three-tier collaboration between the FSA (Financial Services Agency of Japan) + JVCEA (Japan Virtual Currency Exchange Association) + JCBA (Japan Cryptoasset Business Association).
Therefore, most crypto companies operating in the Japanese market are both members of JVCEA and JCBA. For example, Binance's Japan site has publicly announced on Twitter that it is a member of JVCEA (Japan Virtual Currency Exchange Association).
Currently, if exchanges and custodians want to operate in compliance in Japan, they need to have the corresponding qualifications and licenses to join these associations. In recent years, asset management institutions and exchanges entering the Japanese market have generally adopted shell company strategies to operate within Japan.
Attitude towards non-compliant offshore exchanges
In addition to the compliant exchanges mentioned above, there were also many non-compliant exchanges previously conducting promotions and operations in Japan, gaining a large number of users. The main reason why these users engage with offshore exchanges is that:
Tax avoidance and evasion
Diverse types of cryptocurrencies
Comprehensive leverage and contract varieties
Currently, such exchanges were targeted for crackdowns by the Financial Services Agency and the government in February 2025, and related download and access channels have been completely removed from Japan's Apple Store and Google Store, while some Japanese bloggers who helped promote them have also received notification letters.
However, since Japan does not impose any web access restrictions, Japanese users can still access these offshore non-compliant exchanges. There is still a portion of the user base trading on them, but the local promotions have become more conservative.
Controversy over tax rates
Previously, local statistical agencies conducting surveys on crypto users generally reflected that the tax burden and declaration costs are pain points, especially when most Japanese retail investors treat crypto as wealth management (hoarding coins), which increases the complexity of comprehensive taxation and accounting, raising the usage threshold.
It is well known that if you buy 30 million yen worth of BTC through local compliant exchanges and make a profit, the next year you have to pay 45% miscellaneous income tax + 10% resident tax, which is about 55%.
Currently, the Financial Services Agency has confirmed that cryptocurrency taxation will be included in the adjustment scope for 2026, making cryptocurrencies subject to a tax rate of about 20%, similar to stocks.
In other words, investors ultimately only need to pay a maximum of 15.315% national tax and 5% local resident tax. Once this tax is paid, it is equivalent to being completely compliant, and no further payments are required. If it is a corporate investor: only 15.315% national tax is paid, excluding local tax.
Currently, this expected landing will arrive together with Japan's BTC and XRP spot ETFs in 2026.
How project parties operate
Lastly, the most frequently asked question recently is how project parties operate in Japan and what restrictions they face.
According to previous statistics, there are currently at least 20 or more well-known project parties operating and residing in Japan, but most do so under the name of research and operation companies to conduct activities locally.
The main reason is that if project parties want to conduct large-scale business in Japan (such as issuing tokens for fundraising aimed at Japanese users or launching on compliant Japanese exchanges), they must go through the review of JVCEA (Japan Crypto Asset Trading Association). Therefore, compared to Southeast Asia and Dubai, the compliance threshold is higher, and the costs are significant.
Therefore, most project parties in Japan do not operate in the Japanese market. Operations and token issuance activities are conducted through BVI or other offshore entities; fixed cost businesses such as personnel, product development, and offices are conducted through Japanese entities.
This is also a common depiction of most local Japanese projects and foreign projects operating in Japan.
People in Japan do not engage with the Japanese market.
I hope the above content is helpful to you. ❤️
