How to Select a Cryptocurrency Exchange: Top 5 International Recommendations

Is It Illegal to Use Overseas Cryptocurrency Exchanges?

Is it illegal to use overseas cryptocurrency exchanges in Japan? In short, Japanese residents are not prohibited from using overseas crypto exchanges. While Japanese law requires domestic exchanges to register with the Financial Services Agency (FSA), there are no direct regulations restricting individuals from accessing overseas exchange services.

To clarify, understanding Japan's legal framework for crypto assets is essential. The Payment Services Act requires crypto asset exchange operators to register with the Prime Minister. This law primarily targets service providers—meaning the operators of exchanges—and does not impose direct limitations on users.

Therefore, operating an unregistered cryptocurrency exchange within Japan is illegal, but individuals can legally use the services of unregistered overseas exchanges. However, "legal usage" does not equate to "guaranteed safety."

Many overseas crypto exchanges lack FSA registration, which causes concern for Japanese users. Legally, Japanese individuals are not prohibited from personally using unregistered exchanges. The key point is that exchanges unregistered with the FSA do not fall under the protection of Japanese financial regulations.

Overseas exchanges without FSA registration may pose security risks, including hacking, fraudulent tokens, sudden service suspensions, and inadequate asset protection. When using overseas exchanges, always verify their operational status, security measures, incident history, and user reviews.

Key Considerations for Choosing a Cryptocurrency Exchange

Selecting a cryptocurrency exchange requires a comprehensive evaluation of several factors. Don't judge based solely on low fees or a wide selection of tokens. Review the following five points to ensure a secure and efficient trading environment.

Security Strength

Security infrastructure should be your top priority. Asset protection is critical, and you must verify the specific security measures the exchange employs.

Confirm the implementation of these security controls:

• Two-Factor Authentication (2FA): Adds authentication steps for login and withdrawals to prevent unauthorized access
• SSL Encryption: Encrypts communication between users and the exchange to prevent data theft and tampering
• Cold Wallet Storage: Keeps most customer assets offline, minimizing hacking risk
• Multi-Signature Technology: Requires multiple authorizations for asset transfers, preventing unauthorized movement
• Regular Security Audits: Undergoes periodic third-party security audits

Choosing exchanges with multiple robust security measures significantly improves asset safety.

Token Selection

The number of tokens offered is a key consideration. While nearly all exchanges list Bitcoin and Ethereum, the availability of altcoins and new tokens varies widely.

A diverse selection provides these advantages:

• Enables varied investment strategies
• Supports portfolio diversification
• Offers early investment in emerging projects
• Allows flexible allocation based on market trends

However, more tokens aren't always better. Fraudulent projects and worthless tokens may be present, so always verify project credibility before investing.

Fee Structure Comparison

Fees are a critical factor in choosing an exchange. Over time, fee differences can significantly impact returns, especially for active traders. Review these key fee types:

• Trading Fees (Maker/Taker): Charged on each buy/sell transaction
• Spread: The difference between bid and ask prices (actual trading cost)
• Deposit Fees: Charged when funding your account
• Withdrawal Fees: Charged when withdrawing funds
• Transfer Fees: Charged for sending crypto assets to other wallets or exchanges

Lower fees help reduce overall trading costs and boost efficiency. Even small differences add up for frequent traders.

Usability and Convenience

Platform usability is critical. Smooth operation directly affects trading outcomes. Assess the following:

• Intuitive User Interface: Easy navigation for beginners
• Mobile App Quality: Reliable trading access on the go
• Order Types: Availability of limit, market, and stop-loss orders
• Comprehensive Charting: Tools supporting technical analysis
• Japanese Language Support: Website, app, and customer service in Japanese

To avoid missing opportunities, choose platforms with fast order execution.

Trustworthiness and Regulatory Compliance

Finally, verify reliability and transparency. To safely use overseas exchanges, review these aspects:

• Transparency of Operation: Clearly disclosed company location, leadership, and business details
• Proof of Reserves: Demonstrated proper asset custody
• Merkle Tree Asset Verification: Blockchain-based transparency for asset verification
• Security Incident History: Past hacking or asset leaks and their handling
• Regulatory Licenses: Proper licensing from relevant financial authorities

Evaluating these factors helps identify trustworthy exchanges.

Pros and Cons of Overseas Cryptocurrency Exchanges

Using overseas exchanges offers advantages not available domestically, but also introduces unique risks and drawbacks. Here are the major pros and cons to consider.

Benefits of Overseas Cryptocurrency Exchanges

Extensive Token Selection

Overseas exchanges typically list far more crypto assets than domestic ones. Some major platforms support hundreds or thousands of tokens, compared to dozens on Japanese exchanges.

This broad selection enables:

• Early Access to New Projects: Invest early in promising initiatives
• Exposure to Niche Markets: Participate in sector-specific or technology-focused tokens
• Portfolio Diversification: Reduce risk through varied holdings
• Global Trend Participation: Invest in projects gaining worldwide traction

Investing in coins and tokens unavailable domestically is especially attractive for high-risk, high-reward investors.

Lower Spreads and Fees

Overseas exchanges often offer narrower spreads than domestic platforms. The spread is the difference between buying and selling prices—the tighter the spread, the lower your trading cost.

Key benefits include:

• Lower Costs for Active Traders: Advantageous for day traders and scalpers
• Cost Savings on Large Trades: Greater impact for high-volume transactions
• Competitive Fees: Many overseas exchanges charge low fees around 0.1%

Many platforms also offer fee discounts based on trading volume or proprietary token holdings, helping further reduce costs over time.

High Leverage Trading

Many overseas exchanges offer leverage up to 100x, compared to the domestic cap of 2x. This allows traders to control larger positions with less capital.

Key benefits include:

• Improved Capital Efficiency: Leverage allows for larger trades with smaller deposits
• Greater Profit Potential: Small price moves can yield substantial gains
• Short Selling Opportunities: Profit even in declining markets

Note that higher leverage increases both profit and loss potential. Many overseas platforms use "zero-cut" systems, which automatically close positions to prevent losses beyond your deposit, eliminating the risk of debt—a feature not offered by domestic exchanges.

Drawbacks of Overseas Exchanges

Support Language Limitations

Some overseas exchanges only provide customer support in English. While more platforms are adding Japanese, not all offer full native support.

Main challenges include:

• Language Barriers for Support: Trouble resolving issues quickly during emergencies
• Understanding Terms and Conditions: Accurate comprehension of English documents required
• Dependence on Translation Tools: Nuances may be lost in automated translations

While normal trading is usually unaffected, you may need translation tools or English proficiency for inquiries.

No Direct JPY Withdrawals

You cannot directly withdraw funds from overseas exchanges to Japanese bank accounts because they do not interface with Japan's banking system.

The typical process:

1. Purchase crypto assets on the overseas exchange
2. Send assets to a domestic exchange
3. Convert assets to yen on the domestic platform
4. Withdraw to your Japanese bank account

Main drawbacks:

• More Steps Required: Multi-stage process is time-consuming
• Transfer Fees: Additional costs for inter-exchange transfers
• Price Volatility Risk: Asset values may change during the transfer process

This is a necessary limitation, so plan accordingly.

Hacking Risk

Overseas exchanges face hacking risks similar to domestic ones. Several major platforms have experienced hacks resulting in asset losses.

Mitigation strategies:

• Diversify Across Exchanges: Avoid concentrating all assets on a single platform
• Use Cold Wallets: Store long-term holdings offline
• Enforce Two-Factor Authentication: Strengthen account security
• Regularly Move Assets: Avoid leaving large amounts on exchanges for extended periods

Combining these precautions is recommended for asset protection.

Risk of Sudden Service Suspension

Overseas exchanges may suspend service for Japanese users due to regulatory warnings, business changes, or shifts in the regulatory environment. Historically, some platforms have withdrawn from Japan or stopped serving Japanese accounts.

Main risks include:

• Sudden Service Stops: Short notice may leave insufficient time to transfer assets
• Impact of Regulatory Changes: Stricter Japanese regulations may limit access
• Exchange Financial Deterioration: Poor business performance can lead to shutdowns

Japanese support can be unstable, so always monitor for service suspension notices and regulatory updates. Diversifying across multiple exchanges helps manage this risk.

Understanding the Travel Rule Is Essential for Overseas Exchanges

The Travel Rule is an international standard requiring exchanges to share sender and recipient details when transferring crypto assets. Its purpose is to prevent money laundering and terrorist financing, and it is being adopted worldwide.

Japan has introduced the Travel Rule through amendments to the Act on Prevention of Transfer of Criminal Proceeds. As a result, transfers between domestic and overseas exchanges now require detailed information, and users must comply with these new regulations.

Detailed Transfer Information Required

Transfers from domestic to overseas exchanges require notification of sender and recipient details. Examples of required information:

• Sender’s Full Name: Accurate, complete name
• Recipient’s Name: Account name at the destination
• Customer ID Number: Unique identifier issued by the exchange
• Blockchain Address: Wallet address for the transfer
• Transfer Purpose: Sometimes, an explanation of the transfer's reason is required

This information is sent automatically via the exchange's system. If the overseas exchange cannot receive it, the transfer may be rejected.

Transfers May Be Blocked Between Different Solution Providers

Domestic exchanges use various Travel Rule solutions, such as TRUST and Sygna, to securely communicate transfer data. These solutions may not be mutually compatible.

Main issues:

• Inter-Solution Transfer Restrictions: Transfers between exchanges using different solutions (TRUST to Sygna, for example) may be blocked
• Overseas Exchange Compatibility: Transfers may be denied if the overseas platform does not support Japan’s Travel Rule
• Advance Confirmation Needed: Always verify both exchanges support the same solution before transferring

Before using overseas exchanges, confirm which Travel Rule solution they support and ensure compatibility with your domestic platform.

Some Crypto Assets Cannot Be Transferred

Even if a crypto asset is supported domestically, transfers may be blocked under the Travel Rule if the solution only supports specific coins.

Examples:

• Support for Major Assets: Bitcoin, Ethereum, and other major coins are usually transferable
• Altcoin Restrictions: Transfers of some altcoins and minor coins may be limited
• Exchange-Specific Support: Even for the same asset, transfer eligibility may vary by platform

Before sending assets to an overseas exchange, check with your domestic exchange to confirm transfer eligibility under the Travel Rule.

Top 5 Overseas Cryptocurrency Exchanges

Below are five overseas exchanges that are accessible and reliable for Japanese users. Each platform’s key features, benefits, and cautions are explained to help you select the most suitable option for your investment goals.

1st: Major Global Exchange A

Established in Singapore and now based in Dubai, this exchange has grown rapidly. It supports Japanese, offers more than 300 tokens, and is highly regarded for user-friendliness among Japanese clients.

Key Features

This platform offers up to 100x leverage, allowing traders to take large positions with modest funds. Its zero-cut system automatically closes trades to prevent losses exceeding margin, facilitating risk management.

Highlights:

• Full Japanese Support: Website and app are fully localized, and customer service is available in Japanese. Tutorials and FAQs are also in Japanese, ensuring smooth onboarding for beginners.

• Broad Token Selection: More than 350 cryptocurrencies, including Bitcoin and Ethereum, are available, enabling diversified investment and early access to emerging projects.

• Advanced Trading Tools: Professional charting and multiple order types support strategic trading.

• Staking Services: Earn additional income by staking your crypto assets.

Cautions

1. No Direct JPY Deposit or Withdrawal

Direct deposit/withdrawal in yen is not supported. You must buy crypto on a domestic exchange and transfer it. This may be cumbersome for first-time overseas exchange users.

2. No Asset Trust Protection

Unregistered with the FSA, this exchange does not provide asset trust protection. If the platform fails, assets may not be recoverable, so manage your holdings carefully. Avoid leaving large amounts on the exchange, and periodically move assets to a cold wallet.

Rating

• Security: ★★★☆☆
• Ease of Use: ★★★★★
• Fees: ★★★★☆

2nd: Global Trading Platform B

This global crypto exchange, based in the Cayman Islands, offers strong derivatives trading and copy trading features. It supports Japanese, provides an intuitive mobile app, and is popular with over 20 million users worldwide.

Key Features

Maximum leverage of 125x attracts traders seeking large returns. The zero-cut system prevents debt by automatically closing losing trades, supporting safe leverage trading for beginners.

Copy trading is a standout, enabling users to automatically follow professional traders. Even newcomers can participate easily.

Copy trading types:

• Futures Copy Trading: For high-risk, high-reward strategies
• Spot Copy Trading: For long-term, lower-risk positions
• Bot Copy Trading: Automated, strategy-based trades

The exchange also emphasizes asset protection, disclosing reserves using Merkle Tree Proof-of-Reserves and maintaining a reserve ratio above 200% for transparency and user trust.

Cautions

Not registered with the FSA, so regulatory risks exist. Future changes in domestic regulation may restrict service. Also, direct yen deposit/withdrawal is unsupported, requiring crypto transfers from domestic exchanges—factor this into your onboarding process.

Rating

• Security: ★★★★☆
• Ease of Use: ★★★★☆
• Fees: ★★★★☆

3rd: Asia-Based Exchange C

Founded in Hong Kong, this exchange offers an extensive selection of tokens and user-driven events. Over 700 altcoins are supported—among the largest in the industry.

Key Features

1. Extensive Token Listings

Over 700 tokens, including many minor and niche coins, broaden investment opportunities for users seeking unique assets.

Examples:

• Comprehensive DeFi tokens
• NFT project tokens
• Emerging blockchain tokens
• Local or region-specific tokens

2. Low Fees

Spot trading fees are just 0.1%, among the lowest in the industry, and deposit/withdrawal fees are free. Fee discounts for high-volume trading make this platform cost-effective for all user types.

3. Beginner-Friendly Japanese Support

Menus and FAQs are in Japanese, and the mobile app is easy to use, enabling seamless trading anywhere.

Cautions

This exchange experienced a major hack in the past, resulting in asset losses. The platform fully compensated users and has since strengthened security with two-factor authentication and advanced encryption. Given this history, monitor the latest security status before trading.

As a Hong Kong-based exchange, it may be affected by mainland Chinese regulation, which is hostile to cryptocurrencies. Future regulatory changes could impact operations.

Rating

• Security: ★★★☆☆
• Ease of Use: ★★★☆☆
• Fees: ★★★★★

4th: Multifunctional Trading Platform D

Established in recent years, this exchange serves over five million users in more than 100 countries.

Key Features

Highlights:

• Comprehensive Trading Tools: Supports MetaTrader 5 (MT5) for crypto, FX, indices, and precious metals. Offers copy trading, futures, and grid trading.

MT5 features:

• Advanced technical analysis
• Customizable charting
• Automated trading programs (EAs)
• Multi-timeframe analysis
• Asset Protection: Third-party audits for proof of reserves, AI-based KYC, and bank-grade security measures.
• Diverse Investment Products: Over 600 cryptocurrencies and full Japanese support for local users.

Cautions

This exchange is not FSA-registered (regulatory risk), lacks DeFi features (no staking/lending), and charges relatively high trading fees. The trading system can be complex—especially MT5—which may require a learning curve for beginners. In case of platform failure, asset protection may not apply. Past security incidents highlight the need for ongoing vigilance.

Rating

• Security: ★★★☆☆
• Ease of Use: ★★★★☆
• Fees: ★★★★☆

5th: Large-Scale Token Exchange E

This Singapore-based exchange offers more than 2,900 cryptocurrencies—a figure far surpassing rivals. Rapid new listings allow early access to high-potential tokens, making it especially attractive for early investment in emerging assets.

Key Features

• Japanese Customer Support: The official site, app, and support staff are Japanese-speaking, providing quick and reliable responses. Support is available 24/7 via email, chat, and sometimes phone.

• Native Token Benefits: Holding the platform’s token grants:

  • Up to 50% trading fee discounts
  • Priority access to IEOs
  • Voting rights for new listings
  • Extra staking rewards

These perks help lower trading costs and expand investment opportunities.

• Credit Card Purchase: Buy crypto with yen via credit card, bypassing domestic exchanges for immediate access. Note: Credit card fees apply, so for large purchases, domestic exchanges may offer better rates.

This exchange’s standout feature is its massive token selection and rapid listing of new coins. Early access to trending and minor assets is a unique value proposition.

Fast listings offer these advantages:

• Early entry to hot projects
• Potential gains from initial price surges
• Access to diverse blockchain ecosystems

Cautions

Direct JPY trading is not supported. You must transfer crypto via domestic exchanges or use a credit card, factoring in fees and exchange rates. Trading fees are somewhat higher, but holding the native token unlocks discounts. For long-term use, consider acquiring the platform token to reduce costs.

As with all exchanges, assets may not be protected if the platform fails. Don’t leave large sums on the exchange; regularly move holdings to cold wallets. The huge number of tokens means scams and worthless coins may be present—always check project credibility, whitepapers, and team backgrounds before investing.

Rating

• Security: ★★★☆☆
• Ease of Use: ★★★★☆
• Fees: ★★★☆☆

Conclusion: Choose Overseas Exchanges Carefully to Match Your Needs

Overseas crypto exchanges offer diverse tokens and advanced features not found in Japan, making them valuable for expanding investment options. Large token selections, low fees, and high leverage are compelling advantages.

However, overseas exchanges operate under different regulations, so carefully review their security and asset protection. Not being FSA-registered means there’s no regulatory safety net, and assets may be at risk in case of failure.

When choosing an overseas exchange, evaluate these factors:

1. Security Features: Are 2FA, cold wallet storage, and proof-of-reserves in place?
2. Token Selection and Trading Capabilities: Do the offerings match your investment style?
3. Fee Competitiveness: Are fees reasonable for long-term trading?
4. Japanese Language Support and Service: Is the platform easy to use, and is support available?
5. Regulatory Compliance: Is the exchange responsive to rules like the Travel Rule?

To comply with regulations like the Travel Rule, provide accurate information and verify transfer eligibility. Transfers between domestic and overseas exchanges now require more detailed data—be ready for this new standard.

For risk management, take these steps:

• Diversify assets across multiple exchanges
• Avoid leaving large sums on exchanges long-term
• Use cold wallets for extra security
• Regularly review your security settings
• Stay updated on exchange news and regulatory developments

By choosing the right exchange and managing risks, you can maximize investment opportunities. Overseas exchanges offer unique opportunities, but also unique risks. Select platforms that fit your goals, risk tolerance, and trading style to achieve secure, efficient crypto trading.

FAQ

What criteria should I use to evaluate overseas crypto exchanges?

Prioritize security and regulatory compliance, high trading volume, low fees, user reviews and reliability, and robust support. Security and compliance should be your top considerations.

How do major overseas exchanges differ?

Key differences include the number of supported currencies, fee structures, security standards, user interface quality, and regulatory status. Features like trading volume, derivatives, and support quality also vary.

What security risks do overseas exchanges pose, and how can I protect myself?

Main risks are hacking, phishing, and asset theft. Protect yourself by enabling two-factor authentication, setting strong passwords, changing them regularly, monitoring account activity, and storing some assets in cold wallets.

How should Japanese users handle tax reporting for overseas exchanges?

All profits from overseas exchanges are treated as "miscellaneous income" and must be declared to Japanese tax authorities. File your taxes and pay the required income tax based on your earnings.

Should I choose an overseas or domestic exchange?

It depends on your goals. Overseas exchanges offer higher trading volumes and lower fees, while domestic exchanges provide stronger asset protection and regulatory oversight. Beginners and safety-focused users should choose domestic exchanges; those prioritizing trading volume may prefer overseas platforms.

What should I look for when comparing fee structures at overseas exchanges?

Review tiered fee systems based on trading volume, discounts for holding platform tokens, deposit/withdrawal fees, and differences between spot and derivatives trading fees. Consider how fee reductions for higher trading volumes can cut costs over time.