Japan Regulators Target Crypto Deals In Real Estate With New Guidance

In response to the growing adoption of crypto in real estate, four Japanese regulatory authorities have issued joint guidance outlining compliance requirements to mitigate money laundering risks in property transactions.

The request, addressed to key associations from the two industries, warned about the potential risks posed by real estate deals using digital assets, affirming that “given the nature of crypto assets, which can be transferred across borders instantaneously, there is a high risk that they will be used as a settlement method in real estate transactions for money laundering and other illicit activities.”

They also requested firms notify regulators and law enforcement upon discovering unlicensed transactions or unusual fund flows. In addition, it explained that cross-border crypto asset receipts and payments exceeding 30 million yen are subject to reporting obligations:

Furthermore, from the perspective of understanding these actual conditions, the Foreign Exchange and Foreign Trade Act (Act No. 228 of 1949) stipulates that: (1) any person who receives cryptocurrency or similar assets from overseas in an amount exceeding the equivalent of 30 million yen must submit a “Report on Payment or Receipt of Payment”; and (2) in cases where a non-resident acquires real estate or similar assets located in Japan, a “Report on the Acquisition of Real Estate or Rights Thereof Located in Japan.

If passed, the amended law would move crypto out of the payments category and bring it into the same framework as stocks and other securities. The reclassification will require issuers to file annual disclosures, bringing them closer in line with publicly listed companies.

Additionally, the legislation will impose substantial penalties on individuals engaged in illicit activities. For instance, unlicensed crypto operators would face prison sentences ranging from three to ten years.

Fines would be increased from ¥3 million, around $18,800, to ¥10 million, roughly $62,600. Meanwhile, insider trading would also be explicitly banned under the new framework, a prohibition that did not exist under the Payment Services Act.

The outline of the 2026 Tax Reform, released last December, proposed changing the current progressive tax system, in which digital asset gains can be taxed at up to 55%, to a system like the one used for stocks, with a flat 20% tax on crypto income.