Japan treats operating a crypto ATM as a licensable exchange service, and has just raised the penalty for doing it unregistered

Crypto ATMs are legal in Japan but operating one is a licensable exchange service, which is why the machines disappeared in 2017 and returned only in 2022. A reform passed in July 2026 raised the maximum prison term for unregistered operators from three years to ten.

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Operating a crypto ATM in Japan is legal, and the market is one of the most developed in the world: the Financial Services Agency reported more than 12 million accounts at licensed exchange service providers and over JPY 5 trillion in user deposits,⁵ and Japan ranked fourth in the Chainalysis 2026 global adoption index.⁶ The obstacle is not prohibition but the licence. Buying and selling crypto for cash is a crypto-asset exchange service, so an operator needs registration as a crypto-asset exchange service provider.⁷ That requirement is why machines vanished from Japan in the first place: when exchange licensing took effect in April 2017, operating a crypto ATM was classed as part of the licensable exchange business, and the machines that had been common in bars and shops disappeared.¹ They returned only in 2022, through a licensed domestic operator.^1,2 As in most markets on our legislation map, GENERAL BYTES as a hardware and software vendor is not itself performing a licensable activity; it is the in-country operator of the machines who must hold the registration.

Last updated: October 2026

A Mature Framework, and a Market That Came Back Slowly

Japan recognised crypto under the Payment Services Act in 2017 and built one of the world's strictest supervisory regimes around it, with the Financial Services Agency as regulator and the Japan Virtual and Crypto assets Exchange Association as the self-regulatory body.⁷ Machines sit squarely inside that perimeter rather than beside it.

The return was deliberate and small. Gaia Co. Ltd. received its licence from the self-regulatory association on 18 June 2021, deployed its first machine at its Osaka headquarters in August 2022 and a second in its Tokyo office the following month, with a stated plan of up to 50 machines over the following year.^1,2 More recently, COINHUB, which holds Financial Services Agency approval, placed 25 machines across six major cities in its 2025 rollout and has stated a target of 3,000 nationwide.³ The 3,000 figure is an ambition rather than a network, and the gap between the two is the most honest summary of where this market currently stands.

The Licence Is the Wall

An operator must hold, or work under, a crypto-asset exchange service provider registration. In practice that means a Japanese operating entity, a local bank account, a compliance function based in Japan, membership of the self-regulatory association, segregation of customer assets, cold storage and cybersecurity controls, and fit-and-proper management. Registration is slow and document-intensive. The reporting on this market is consistent that the requirement has kept most international crypto ATM operators out entirely,³ and the pressure has run in the other direction too: Bybit announced in December 2025 that it would restrict access for Japanese users.⁹

The consequences of operating without registration have just become considerably heavier. The FIEA amendment passed by the National Diet on 15 July 2026 raises the maximum prison term for unregistered crypto operators from three years to ten, and the maximum fine from JPY 3 million to JPY 10 million.⁴ As with the rest of our legislation map, registration sits with the in-country operator of the machines, not with GENERAL BYTES as hardware and software vendor.

AML, KYC and What the Machines Actually Allow

There is no anonymity tier and, on the evidence of the machines actually deployed, no walk-up use either. Gaia's published structure required customers to register online and receive a card by post before using a machine, and then capped use at JPY 100,000 per transaction, three times a day, five times a week and twenty times a month, with an annual ceiling of JPY 5 million that could be reduced to JPY 2 million depending on the customer's income. Access was limited to weekday office hours at the operator's own premises.¹

Those figures are one operator's published terms rather than a statutory ceiling, so another operator's limits may differ, but they show what a compliant Japanese deployment has looked like in practice. Travel rule obligations apply to transfers on top of customer identification.⁸ Any hardware and software plan for Japan should assume identity verification from the first transaction and reporting built in from the start.

Tax: Reform Is Coming, With Conditions

Crypto gains in Japan have been treated as miscellaneous income at progressive rates reaching about 55%, which held back retail participation. That is changing, but more slowly and more narrowly than the headlines suggest. The FIEA amendment of 15 July 2026 moves crypto from the Payment Services Act into the Financial Instruments and Exchange Act as a new category of specified cryptoassets, with full effect targeted for fiscal 2027; around 105 tokens listed on licensed exchanges are expected to qualify, and stablecoins stay under the Payment Services Act.⁴

The flat 20% rate, split 15% national and 5% local, sits in the separate 2026 Tax Reform Outline rather than in the amendment itself, is projected to take effect on 1 January 2028, and applies only to gains on specified cryptoassets traded on licensed exchanges. Staking, decentralised finance, non-fungible tokens and trades on foreign or unregistered platforms remain taxed as miscellaneous income at up to 55%.⁴ The amendment also gives the regulator the legal basis to build an approval framework for spot exchange-traded funds, but no product has been filed, approved or listed.⁴ For an operator, the relevant point is that a simpler tax position should lift retail participation, but not before 2028 and not across all activity.

Banking

Japan has a deep banking system, but for a crypto business the local bank account is part of the registration process rather than something arranged afterwards, which makes it a gating item rather than a parallel workstream. We did not find a source we could verify on how Japanese banks treat machine operators specifically, so this article makes no claim about it.

The Next 24 Months

The direction is towards a clearer and more investor-friendly regime, with the FIEA reclassification taking effect in fiscal 2027, the flat tax projected for 2028 and an exchange-traded fund framework still to be written.⁴ For machines specifically, the trajectory is expansion led by a small number of licensed domestic operators rather than an open market, and the penalties for operating outside that group have just increased sharply.^3,4

For anyone assessing Japan, the two realistic routes are the same ones the market already shows: complete the registration with a Japanese entity, local bank account and in-country compliance function, or deploy under an operator that already holds it. The questions worth settling first are which of those routes is open, what the registration timeline realistically looks like for the intended model, and whether the machine and its software can meet Japanese customer identification and travel rule requirements as supplied rather than after modification.

Sources and references

1. Tokyo FinTech, 20 September 2022: when crypto exchange licensing took effect in Japan in April 2017, operating a crypto ATM was classed as part of the licensable exchange business and existing machines disappeared; Gaia Co. Ltd. received its licence from the Japan Virtual and Crypto assets Exchange Association on 18 June 2021 and deployed its first machine in Osaka in August 2022, with online registration, a mailed card, JPY 100,000 per transaction, three times a day, five times a week, twenty times a month and an annual cap of JPY 5 million, reduced to JPY 2 million depending on income: medium.com/tokyo-fintech
2. ATM Marketplace, 5 August 2022, on the return of crypto ATMs to Japan and Gaia's plan to deploy up to 50 machines over the following twelve months: atmmarketplace.com
3. Crypto Briefing, June 2026: COINHUB holds FSA approval, placed 25 machines across six major cities in its 2025 rollout and is targeting a nationwide fleet of 3,000; the article says the know-your-customer and anti-money-laundering requirement has kept most international crypto ATM operators out of the market: cryptobriefing.com
4. TFTC, on the FIEA amendment given final approval by the National Diet on 15 July 2026: crypto moves from the Payment Services Act into the Financial Instruments and Exchange Act as specified cryptoassets with full effect targeted for fiscal 2027, stablecoins remain under the Payment Services Act, the maximum prison term for unregistered operators rises from three to ten years and the maximum fine from JPY 3 million to JPY 10 million, and the 20% flat rate sits in the separate 2026 Tax Reform Outline projected for 1 January 2028 and limited to specified cryptoassets traded on FSA-licensed exchanges: tftc.io
5. Financial Services Agency discussion paper, 10 April 2025: accounts at cryptoasset exchange service providers exceed 12 million, user deposits exceed JPY 5 trillion, and about 7.3% of investors with investment experience hold cryptoassets: fsa.go.jp
6. Chainalysis 2026 Global Crypto Adoption Index, published 23 September 2026: Japan ranks fourth of 117 countries: chainalysis.com
7. Global Legal Insights, Blockchain and Cryptocurrency Laws 2026, Japan: the Payment Services Act framework and the scope of crypto-asset exchange services: globallegalinsights.com
8. Notabene on travel rule obligations in Japan: notabene.id
9. CoinDesk, 23 December 2025: Bybit to restrict access for Japanese users as regulatory pressure mounts: coindesk.com

Legal Disclaimer: This article by GENERAL BYTES is for informational purposes only and does not constitute formal legal, financial, or investment advice. Japan's crypto framework is undergoing significant reform, with the FIEA reclassification targeted for fiscal 2027 and a flat capital gains rate projected from 2028; always consult specialised local legal counsel and confirm current Financial Services Agency and self-regulatory association requirements before considering market entry.