How to Choose a Cryptocurrency Exchange: Top 5 Recommended Platforms (International Edition)

Is It Illegal to Use Overseas Crypto Exchanges?

In Japan, using overseas crypto exchanges is not illegal. While recent regulations require crypto asset exchange operators to register with the Financial Services Agency (FSA), these rules primarily target businesses, not individual users. There are no direct legal restrictions on personal use.

Legal Basis

The Payment Services Act in Japan requires businesses operating crypto asset exchanges to register with the Prime Minister. The main goal of this law is to ensure the soundness of operators and protect users.

Crucially, this law regulates those providing "crypto asset exchange services" and does not impose legal restrictions on individuals using these services. In other words, individuals are not violating the law by using overseas exchanges that are not registered with the FSA.

However, it is illegal for unregistered operators to actively conduct business in Japan, and there have been instances where the FSA has issued warnings. This environment often leads to misunderstandings, such as “using overseas exchanges is illegal.”

Registration Status of Overseas Exchanges and Common Misconceptions

Many overseas crypto exchanges are not registered with Japan’s FSA, which can cause concern among domestic users. In some cases, overseas platforms have restricted access for Japanese users following FSA guidance.

Such reports tend to reinforce the impression that “overseas exchanges are illegal.” However, as explained, using unregistered overseas exchanges is not a legal violation for individuals. Still, it is essential to fully understand that using these platforms is at your own risk.

Security Considerations

When using overseas exchanges not registered with the FSA, you must pay special attention to security risks. This includes the risk of hacking, handling fraudulent crypto assets, and the possibility of sudden service suspension.

When selecting an overseas exchange, carefully review its operating history, security measures, and user reviews. Additionally, avoid concentrating all your assets on one exchange. Use multiple wallets or exchanges to diversify and mitigate risk.

Key Factors When Choosing a Crypto Exchange

Choosing a crypto exchange requires a comprehensive evaluation of several important factors. The following are five key points to consider in detail.

Strong Security

Security is the top priority when selecting an exchange. In crypto asset trading, safeguarding client funds is crucial. Verify what measures the exchange has implemented to protect assets.

Key security features include:

• Two-factor authentication (2FA): implementation and recommendation
• SSL encryption for secure communication
• Asset management via cold wallets
• Regular security audits
• Fraud detection systems

Also review server stability, DDoS protection, any past security incidents and how they were handled, and the quality of customer support, which is vital in the event of problems.

Token Variety

The number and variety of assets available are important criteria. While most exchanges offer major assets like Bitcoin and Ethereum, altcoin availability can vary widely.

Benefits of exchanges with a broad token selection include:

• Access to diverse investment opportunities
• Easier portfolio diversification
• Early access to new projects
• Flexible investment strategies to match market trends

However, a large selection may also include low-liquidity tokens, so it is advisable to check trading volume and market reputation as well.

Fee Comparison

Trading costs can significantly affect long-term returns, making it essential to examine fee structures in detail. Key fees to consider include:

• Trading fees (maker/taker)
• Spreads (price differences for brokerage)
• Deposit fees
• Withdrawal fees
• Transfer fees

Compare several exchanges and choose one with a fee structure that matches your trading style. For example, active traders may find that small fee differences add up to significant annual costs, while long-term investors may focus more on deposit, withdrawal, or management fees than trading fees.

Ease of Use and Convenience

The usability of a trading platform directly impacts trading efficiency and accuracy. Key considerations include:

• Intuitive, user-friendly interface
• Mobile app functionality and stability
• Order types and execution speed
• Advanced charting tools
• Multi-language support (especially Japanese)

For beginners, exchanges with simple interfaces are best. Experienced traders may prefer platforms with advanced analytics and diverse order options.

Reliability and Transparency

The reliability and transparency of an exchange are critical for a safe trading environment. Evaluate reliability by checking:

• Disclosure of operating company information
• Proof of reserves
• Third-party audit status
• History of security incidents and responses
• Regulatory compliance in different countries

Exchanges that proactively disclose due diligence and Merkle Tree data demonstrate high transparency.

Transparency Through Due Diligence

Due diligence is an in-depth assessment and evaluation of investment targets or business partners. For crypto exchanges, disclosing independent third-party investigation results provides the following benefits:

• Evidence of sound management systems
• Financial transparency
• Clarification of risk factors
• Assessment of investor protection measures

This enables users to choose exchanges with greater peace of mind.

Transparency With Merkle Trees

A Merkle Tree is a blockchain data structure that allows efficient verification of large amounts of data. Exchanges using Merkle Trees provide several advantages:

• Proof of customer asset holdings
• Data tampering prevention
• Verification of transaction record integrity
• Greater transparency of reserves

The Merkle Tree structure allows for immediate detection of data tampering, greatly enhancing trust in trading and asset management.

Advantages and Disadvantages of Overseas Crypto Exchanges

Advantages of Overseas Crypto Exchanges

Extensive Token Selection

One of the main attractions of overseas crypto exchanges is their overwhelming range of listed tokens. Leading platforms offer hundreds or even thousands of assets, providing far more options than domestic exchanges.

Benefits of a large token selection include:

• Access to emerging projects not available domestically
• Ability to adopt investment strategies ahead of market trends
• Diversification and risk reduction through portfolio variety
• Opportunity to join projects early for higher potential returns

However, a larger selection may include illiquid or fraudulent projects. Thorough research is essential, especially for new tokens. Carefully evaluate project fundamentals, the development team’s credibility, and community activity.

Low Spreads and Fees

Many overseas exchanges set lower trading costs than domestic ones. Spreads—the difference between buy and sell prices—are especially narrow, which can significantly reduce costs for frequent traders.

Benefits of low spreads include:

• Lower effective transaction costs
• Greater ease of securing profits in short-term trades
• Ability to trade closer to market prices
• Higher cost savings with increased trading volume

However, fee structures vary by exchange, and some may have low trading fees but higher deposit or withdrawal fees. Be sure to evaluate total costs.

High-Leverage Trading

Overseas exchanges offer much higher leverage than the 2x maximum allowed by domestic regulations. Some platforms provide leverage of 100x or more.

Advantages of high leverage trading include:

• Ability to control large positions with little capital
• Improved capital efficiency
• Potential to profit from small market movements
• Wider range of short-term trading strategies

Leverage is a double-edged sword: while it can magnify profits, it also increases loss risk. Many overseas exchanges use a “zero-cut system,” which automatically closes positions if losses exceed margin, preventing debt. However, you can still lose your entire margin, so strict risk management is essential.

Disadvantages of Overseas Exchanges

Language Support

One major obstacle to using overseas exchanges is language support. Some platforms offer comprehensive Japanese support, but most customer service is in English only.

Potential issues include:

• Difficulties with urgent inquiries
• More time needed to understand complex terms
• Risk of missing important rules or notices
• Longer time to resolve issues

Most platforms are intuitive for daily use, but in case of problems, you may need to use translation tools or communicate in English.

No Direct Yen Withdrawals

Most overseas exchanges do not support direct yen deposits or withdrawals. The process usually involves:

1. Exchanging yen for crypto at a domestic exchange
2. Transferring crypto to the overseas exchange
3. Trading on the overseas exchange
4. Transferring profits (crypto) back to a domestic exchange
5. Exchanging crypto for yen and withdrawing

This adds extra fees and time, and increases the risk of transfer errors. Managing accounts at both domestic and overseas exchanges also increases your security management burden.

Hacking Risks

Crypto exchanges are constant targets for hacking. Even world-renowned exchanges have suffered major breaches in the past.

Measures against hacking risks include:

• Do not concentrate all assets on one exchange
• Keep non-trading assets in cold wallets
• Enable two-factor authentication
• Regularly update passwords
• Continuously monitor exchange security status

Especially for overseas exchanges not under FSA oversight, compensation systems may be inadequate in the event of a hack. Personal risk awareness is crucial.

Sudden Service Suspension Risks

Overseas exchanges may suddenly stop serving users from certain countries due to changing regulations or operational decisions.

Examples include:

• Suspending service to Japanese users after regulatory warnings
• Withdrawing from regions due to policy changes
• Scaling back services because of licensing difficulties

To manage these risks, use multiple exchanges and diversify your assets. Regularly check how your exchange handles regulations and its stance on the Japanese market.

Understanding the Travel Rule Is Essential When Using Overseas Exchanges

The “Travel Rule” is an international regulation that requires crypto exchanges to share sender and recipient information for crypto transfers. This rule, aimed at preventing money laundering and terrorist financing, was recently adopted in Japan.

Detailed Transfer Information Required

Under the Travel Rule, sending crypto from a domestic to an overseas exchange requires providing detailed information. Required data includes:

• Sender’s name
• Recipient’s name
• Customer identification number
• Blockchain address
• Purpose of the transfer
• Additional information as required by the exchange

Information requirements differ by exchange, so confirm them in advance. Incomplete information can result in transfer rejection or significant delays.

Transfer Restrictions Between Different Solutions

To comply with the Travel Rule, domestic exchanges use various technical solutions like TRUST and Sygna, which may not be compatible with each other.

Potential issues include:

• Transfers may not be possible between exchanges using different solutions
• Limited combinations of transferable exchanges
• Need to verify transfer routes in advance

Since overseas exchanges may use their own systems, always check system compatibility between your domestic and overseas exchanges before transferring assets.

Some Crypto Assets Cannot Be Transferred

Not all crypto assets can be freely transferred under the Travel Rule. Supported tokens vary by exchange, and restrictions include:

• Major assets (e.g., Bitcoin, Ethereum) are generally transferable
• Transfers of minor altcoins may be restricted
• Transferable tokens depend on each exchange’s policies

When planning a transfer to an overseas exchange, always confirm that both exchanges support your asset under the Travel Rule. If not, you will need to consider alternative transfer methods.

Options for Overseas Crypto Exchanges

Each overseas crypto exchange has unique features and strengths. Below, we outline the characteristics of representative platforms.

Option 1: Multi-Function Platform

This exchange has been operating for several years and has a large global user base. It offers full Japanese support and lists over 300 tokens, making it highly convenient for Japanese users.

Main Features

High-leverage trading is available, allowing large positions with small capital. The zero-cut system automatically cuts losses before they exceed your margin, offering strong risk management.

Additional highlights include:

• Multi-language support: Website, app, and customer support are all available in Japanese, reducing language barriers
• Extensive token selection: Trade a broad range of crypto assets, from major tokens to new projects
• User-friendly interface: Designed for intuitive use by both beginners and experts

Cautions

Note the following limitations:

• No direct yen deposits/withdrawals (must use a domestic exchange)
• Not registered with the FSA; not covered by trust protection
• No asset protection guarantee if the platform fails

Overall evaluation:

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

Option 2: Copy Trading Specialist

This platform specializes in derivatives and copy trading. It is widely used globally, and its system allows even beginners to copy professional traders’ strategies easily.

Main Features

The standout feature is robust copy trading. Even users with little trading knowledge can automatically mirror experienced traders’ moves.

Benefits of copy trading include:

• Learn strategies by following professionals
• Significantly reduce trading time
• Follow multiple traders at once
• Customize your own risk settings

High-leverage trading and a zero-cut system help avoid debt risk. The platform also maintains a high reserve ratio with its own asset protection fund to enhance safety.

Cautions

Note the following points:

• Not registered with the FSA; potential future regulatory risk
• No direct yen deposits/withdrawals
• Copy trading does not guarantee profits; losses are possible

Overall evaluation:

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

Option 3: Token Variety Focus

This platform is known for its extensive token list, offering over 700 crypto assets. It is especially popular with users seeking opportunities in minor altcoins and new projects.

Main Features

The main strength is its industry-leading token lineup, including both major assets and minor altcoins that are hard to find on domestic exchanges.

Benefits include:

• Early access to new projects
• Easy portfolio diversification
• Flexible strategies based on market trends
• Access to potentially high-return tokens

Trading fees are among the lowest in the industry, and deposits/withdrawals are free, making it ideal for small trades.

Cautions

Security incidents have occurred in the past; while measures have been improved, always check the latest security status.

Additional cautions:

• Regulatory risk due to lack of FSA registration
• Not covered by trust protection
• Geopolitical risks depending on location
• Includes low-liquidity tokens; thorough research is required

Overall evaluation:

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

Option 4: Multi-Tool Platform

This platform is known for advanced trading tools and a wide range of financial products. It serves millions of users worldwide and is equipped with features tailored for professional traders.

Main Features

It supports MetaTrader 5 (MT5), allowing trading of crypto assets, forex, stock indices, precious metals, and more—all in one place.

Features include:

• Copy trading
• Futures trading
• Grid trading
• Automated trading bots
• Advanced chart analysis tools

Third-party audits are conducted to prove reserves, and the platform actively protects user assets. It uses AI for identity verification and adopts bank-level security measures.

Cautions

While feature-rich, beginners may find the platform complex. Other points to watch:

• Regulatory risk due to lack of FSA registration
• Limited DeFi features (staking, lending, etc.)
• Somewhat higher trading fees than other platforms
• History of security incidents

Overall evaluation:

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

Option 5: Largest Token Selection

This platform far surpasses others with its vast token list—over 2,900 crypto assets. Rapid new listings make it ideal for early investment in promising tokens.

Main Features

Its main advantage is the industry's largest token selection, providing early access to emerging projects and trending tokens as well as major assets.

Other features:

• Japanese-language customer support: Website, app, and staff all support Japanese
• Native token benefits: Holding the platform's token provides fee discounts, priority access to new listings, and voting rights
• Credit card payments: Buy crypto directly in yen without a domestic exchange for fast trading

The biggest strength is "a rich token selection and rapid new listings." Access to minor and newly listed tokens is a major advantage over other exchanges.

Cautions

Points to note:

• Direct yen trading is limited (credit card purchases are possible, but fees apply)
• Trading fees are somewhat higher (discounts available with the native token)
• Regulatory risk due to lack of FSA registration
• Not covered by trust protection
• Many low-liquidity tokens; thorough research is necessary before investing

Overall evaluation:

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

Summary: Select Overseas Exchanges Carefully Based on Your Needs

Overseas crypto exchanges offer a wide range of tokens and advanced trading features not available domestically, making them attractive for users looking to expand their investment options. However, since they operate under different regulations, users must pay close attention to security and asset protection.

Key considerations when choosing an overseas exchange:

1. Check security measures: Evaluate two-factor authentication, cold wallet management, and past security performance

2. Token selection and liquidity: Review not just the number of tokens, but also each token's trading volume and reputation

3. Compare fee structures: Assess overall costs, including deposit/withdrawal and transfer fees—not just trading fees

4. Usability and language support: Ensure comprehensive Japanese support and intuitive interfaces

5. Regulatory compliance and risk management: Consider Travel Rule compliance and the risk of sudden service suspension

To comply with regulations like the Travel Rule, always confirm information and transfer compatibility before sending funds. This article compared popular overseas exchanges and explained how to maximize benefits while managing risks.

Finally, when using overseas exchanges, remember these basic principles:

• Diversify and avoid concentrating assets on one exchange
• Keep non-trading assets in cold wallets
• Regularly review security settings and update passwords
• Continuously check operational and regulatory changes
• Invest only surplus funds, understanding that you are responsible for your own actions

By applying these strategies, you can enjoy the investment opportunities offered by overseas exchanges while managing risks. The crypto market evolves daily, with new technologies and services constantly emerging. Stay up to date and make prudent decisions to succeed.

FAQ

What Are the Most Important Points When Choosing an Overseas Crypto Exchange?

The top three factors are security, trading volume, and fees. Confirm licensing, select exchanges with ample trading volume, and compare fee structures, as they directly affect profits.

How Can I Identify a Secure Overseas Exchange? How Do I Check Licenses and Regulations?

Verify financial licenses and regulatory approvals. Look for licenses from trusted authorities such as the FCA or ASIC, check operational history and past incidents, and review information on the official website to assess security.

Which Overseas Exchanges Have the Lowest Fees? How Do I Compare Fee Structures?

Some exchanges offer industry-lowest fees, such as 0% maker fees for spot trading and 0.01% taker fees for futures. Fees vary by trading volume or VIP status, so check comparison sites for the latest details.

What’s the Difference Between Overseas Exchanges Japanese Users Can Access and Those They Can’t?

Exchanges open to Japanese users accept registrations, while others reject them. Many overseas exchanges are accessible to Japanese users, but some restrict access due to local regulations.

What Are the Main Differences Between Overseas and Domestic Exchanges? Pros and Cons?

Overseas exchanges offer more trading methods, fewer restrictions, and more tokens, but with looser regulation and less disclosure. Domestic exchanges have stricter rules, better user protection, and higher safety, but fewer trading options and tokens.

Are There Scams or Risks Beginners Should Watch for When Choosing an Overseas Exchange?

Unregulated exchanges carry a high risk of scams and may offer inadequate support. Always check user reviews and security, and choose reliable exchanges only.

What Is the KYC (Know Your Customer) Process for Overseas Exchanges and What Documents Are Required?

Overseas exchanges require government-issued photo identification, such as a driver’s license, passport, or ID card for KYC. The documents must be valid and up to date.