Original Article Title: "Web3 Japan Market: 2025 Latest Data, Scale, Interpretation"

Original Article Author: AB KUAI DONG, Crypto Content Blogger

Following the last article on "Web3 Practitioners' Relocation to Japan and Local Life," despite repeated emphasis, many peers who have come to Japan to live and work do not focus on the Japanese market. However, there are still many friends who want to understand the specific situation of Japanese users and the industry.

Especially later, it was found that the research and information on the Japanese Web3 market in the Chinese-speaking community were relatively outdated. Therefore, I decided to update an article summarizing the research on the Japanese market.

This article incorporates multiple contents, citing data and information from the Japan Cryptocurrency Asset Association, the Japan Financial Services Agency, compliant exchanges, etc., for research and reference purposes only.

This article covers the following main contents:

· Japanese Web3 Market (user group's growth rate)

· Japanese Crypto Market Size and Growth (opportunities?)

· Investor User Group Profile (not engaging on-chain?)

· Government Regulations (attitude towards non-compliant offshore entities?)

· Tax Rate Controversy (increase or decrease?)

· How Project Teams Operate (legal risks?)

Japanese Web3 Market

Overall, although Japan is a relatively developed country in Asia with a population of 124 million, the number of young people is decreasing. Amid the extreme prosperity of local stock markets, real estate, anime culture, and tourism, people's attention has become highly fragmented, leading to less motivation for young people to focus on Crypto, with the majority being in the middle-aged group.

However, due to the global promotion and popularity of cryptocurrency, the local participants in Crypto in Japan are also growing rapidly, and in May 2025, the user base and transaction volume reached new highs.

Characteristics: A user base of 12.41 million, mainly consisting of 30-40-year-old middle-class individuals, with a financial management orientation, leaning towards long-term allocation rather than pure speculation. The majority have an annual income below 7 million Japanese yen (320,000 RMB), facing high cryptocurrency capital gains tax (all holding without selling, waiting for the 26-year tax reduction policy).

Japanese Crypto Market Size and Growth

In 2022, the spot trading volume of the entire Japan Compliant is only about 1 trillion yen (about 6.8 billion US dollars). Then in 2023, it was 1.13 trillion yen (about 7.6 billion US dollars), growing by only about 13%.

However, by 2024, after Bitcoin began to be fully adopted by Wall Street, Japan's cryptocurrency spot trading volume immediately surged to 2.06 trillion yen (about 14 billion US dollars), with a year-on-year growth rate of 82%, finally becoming a sizable market.

In terms of trading pairs: Bitcoin (BTC) accounts for approximately 70%, while Ethereum (ETH) is only about 14%. This has also led many Japanese compliant firms to mainly promote buying BTC in their marketing and customer acquisition efforts, for example, TikTok often sees exchanges running Bitcoin ads.

Additionally, starting in 2024, the popularity of XRP slightly exceeded that of ETH.

The Cryptocurrency Market with 12.41 Million Users

Although this data may seem promising, with at least 12.41 million cryptocurrency users, it actually started to pick up from 2024 onwards.

In 2022, Japan's cryptocurrency user base was only 5.61 million; in 2023, it was 6.46 million, with a growth rate of only 15%; but by 2024, this number skyrocketed to 9.17 million people, growing by 41%.

Currently, in May 2025, it has reached 12.41 million. This means that Japan's cryptocurrency market, with its domestic user base, is also rapidly expanding, with custody assets exceeding 4.26 trillion yen (approximately 27.5 billion US dollars).

Investor User Profile

In May 2025, the cryptocurrency user base in Japan has reached 12.41 million, accounting for about 15% of Japan's adult population.

Among them, the main investors are middle-class individuals aged 30-40, characterized by:

· Heavily reliant on YouTube, X, and other social media

· Having a relatively stable income

· An annual income of less than 7 million yen

In terms of investment behavior and motivation:

· Financial planning-oriented, leaning towards long-term allocation, not speculative

· Mostly engage with small amounts, using exchange apps for transactions

· Low transaction frequency, with most users placing orders only a few times a year

· On-chain native players, representing only a very small portion of the community

Overall, the cryptocurrency user base in Japan is gradually becoming mainstream but still prefers security and simplicity.

This has also led to the discovery that most projects and exchanges in Japan find it more effective to engage with YouTubers and X influencers for long-term partnerships rather than traditional media placements. As a result, the Japanese crypto community has become a place where everyone is a content creator, with individuals striving to become influencers, putting traditional media outlets under pressure.

Regulatory Environment

Japan's cryptocurrency regulatory framework is similar to that of the United States. It involves a three-tier collaboration among the FSA (Financial Services Agency of Japan), JVCEA (Japan Virtual and Crypto assets Exchange Association), and JCBA (Japan Cryptocurrency Business Association).

Therefore, you will find that most cryptocurrency businesses operating in the Japanese market are members of both JVCEA and JCBA. For example, Binance's Japan platform has publicly announced its membership in JVCEA (Japan Virtual Currency Exchange Association) on Twitter.

Currently, for exchanges and custodial institutions to conduct market operations compliantly in Japan, companies must hold the appropriate qualifications and licenses to join these associations. In recent years, asset management firms and exchanges entering the Japanese market have generally adopted methods such as mergers and acquisitions to operate in Japan.

Attitude Toward Non-compliant Offshore Exchanges

In addition to the compliant exchanges mentioned above, there have been many non-compliant offshore exchanges that have conducted promotions and operations in Japan, attracting a large number of users. The main reasons why these users engage with offshore exchanges are:

· Tax avoidance and evasion

· Diverse range of cryptocurrencies

· Availability of leverage and a wide variety of contract types

These exchanges were collectively targeted by the Japanese Financial Services Agency and government in February 2025, leading to the removal of related download and access channels from the Japanese regional Apple Store and Google Store. Some Japanese influencers who assisted in promoting these exchanges have also received notification letters.

However, due to Japan not implementing web access restrictions, Japanese users can still access these non-compliant offshore exchanges. There is still a subset of users who continue to trade on these platforms, albeit more discreetly due to the local crackdown on promotion activities.

Tax Rate Controversy

Previously, in a survey conducted by the local statistics agency targeting crypto users, it was widely reflected that the tax burden and reporting costs are pain points, especially when most retail investors in Japan treat crypto as a form of financial management (HODLing), the comprehensive taxation and accounting complexity raise the threshold for use.

As is well known, if you use a domestic compliant service to buy BTC worth 30 million yen and make a profit, in the second year, you will have to pay 45% miscellaneous income tax + 10% resident tax, totaling about 55%.

Currently, the Financial Services Agency has confirmed that cryptocurrency taxation will be included in the adjustment scope for 2026, making cryptocurrency subject to approximately a 20% tax rate, similar to stocks.

This means that investors will ultimately only need to pay a maximum of 15.315% national tax and 5% local resident tax. Additionally, once this tax is paid, it is equivalent to being completely compliant, and no further taxes will be required. For corporate investors, only 15.315% national tax is payable, without including local taxes.

The current expectation is that this will be implemented in conjunction with Japan's BTC and XRP spot ETF in 2026.

How Project Teams Operate

Finally, the most frequently asked question recently is how project teams operate in Japan and what kind of restrictions they will face.

According to previous statistics, there are currently at least 20 project teams with some reputation in the market, with offices and residence in Japan, but most of them operate locally under the name of a research and development company.

The main reason is that if a project team wants to conduct large-scale operations in Japan (such as issuing coins for fundraising targeting Japanese users, or listing on a Japan-compliant exchange), it must pass the review of the JVCEA (Japan Virtual and Crypto assets Exchange Association). Therefore, compared to Southeast Asia and Dubai, this compliance threshold is higher and the costs are significant.

Therefore, most project teams in Japan do not target the Japanese market. Operational and token issuance activities are conducted through BVI or other offshore entities; only fixed expenses such as personnel, product development, and office space are carried out through Japanese entities.

This is also the current situation for most local Japanese projects and foreign projects that have set up offices in Japan.

Being in Japan but not targeting the Japanese market.

We hope the above information is helpful to you.

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