Cold Wallet Requirement Japan

When it comes to storing cryptocurrency in Japan, cold wallet requirement Japan, mandatory secure storage rules for crypto exchanges operating in Japan. Also known as offline storage mandates, these rules force exchanges to keep the vast majority of user funds in hardware wallets disconnected from the internet to prevent hacks. This isn’t a suggestion—it’s the law, enforced by Japan’s Financial Services Agency (FSA) since 2018. If an exchange wants to operate legally in Japan, it must store at least 95% of customer crypto in cold wallets. The rest can be in hot wallets for daily trading, but even that small slice is tightly monitored.

These rules didn’t come out of nowhere. After the 2018 Coincheck hack, where $530 million in NEM tokens were stolen, regulators realized that keeping crypto online was too risky. So they made cold storage the baseline. Today, every licensed Japanese exchange—like BitFlyer, Zaif, or Coincheck after its rebuild—must prove to auditors that their cold wallets are physically secured, encrypted, and access-controlled. Multi-signature setups are standard. Some even use geographically separated vaults. The FSA doesn’t care if you’re a retail trader using a personal Ledger or Trezor—those rules only apply to exchanges. But if you’re running a business that holds crypto for others, you’re bound by this.

It’s not just about wallets, though. The requirement ties into broader Japanese crypto regulations, a comprehensive legal framework governing digital asset exchanges, taxation, and consumer protection. Also known as Virtual Currency Act, this law classifies crypto as property, not currency, and demands strict KYC, anti-money laundering checks, and regular reporting. The cold wallet rule is just one piece—but it’s the most visible. It’s why you won’t see Japanese exchanges offering high-yield staking or DeFi lending: those require online access, which conflicts with the cold storage mandate. Even foreign exchanges that want to serve Japanese users must comply. That’s why Binance, Kraken, and others either block Japanese users or operate through licensed local partners.

What does this mean for you? If you’re a Japanese resident, your exchange is forced to keep your crypto safe by law. You don’t need to use a cold wallet yourself—but if you’re holding large amounts, you should. Exchanges can still fail, get hacked internally, or go bankrupt. The cold wallet rule reduces the risk, but doesn’t eliminate it. For serious holders, moving funds to your own hardware wallet is still the smartest move. And if you’re a developer or project launching a token in Japan? You need to understand these rules before even thinking about listing. The FSA doesn’t tolerate loopholes.

Below, you’ll find real-world examples of how these rules play out—from exchange audits to enforcement actions. You’ll see what happens when a company cuts corners, and how the market adapted after the biggest crypto crash in Japan’s history. These aren’t theoretical guidelines. They’re the reason some exchanges shut down, and others became trusted names.