It is not illegal for individuals residing in Japan to trade with overseas forex brokers.The Financial Instruments and Exchange Act regulates "businesses that conduct financial instrument transactions as a business with residents of Japan," and there areno provisions to punish users.
On the other hand, the Financial Services Agency (FSA) and the Consumer Affairs Agency have repeatedly warned against trading with unregistered overseas companies, andas of August 27, 2026, the FSA's warning list includes 1,150 unregistered companies.ExnessThis list includes companies with many Japanese users, such as XMTrading
This article, based on legal texts and primary information from the Financial Services Agency and the Consumer Affairs Agency,the boundaries of what is illegal and what is not, explains how to correctly read the warning list, regulatory developments in 2026, actions that users may take that are illegal, and where to seek advice in case of trouble.
Conclusion | The Illegality of Overseas Forex Trading
- It is not illegal for users to trade with overseas forex brokers. The registration obligation under Article 29 of the Financial Instruments and Exchange Act is imposed on brokers, and there is no provision to punish users.
- What is illegal is for unregistered businesses to solicit residents of Japan(Article 197, Paragraph 1, Item 4-3 of the same law: imprisonment for up to 10 years or a fine of up to approximately $62,500, or both. This was increased by the amendment effective August 12, 2026).
- The Financial Services Agency's warning list is a record of "unregistered solicitations by businesses"and does not indicate any illegality on the part of the users. However, even if problems arise from transactions with listed businesses, users cannot expect relief under the Japanese system.
- There are also illegal activities on the user's side, such as: failing to declare profits, making referrals or soliciting for compensation, soliciting investments, distributing trading instructions, providing EAs for a fee, and using accounts under someone else's name.
- the amendment to the Payment Services Act (regulations on cross-border payment collection) which will come into effect on June 1, 2026. Thiscould potentially change the methods of deposit and withdrawal, such as domestic bank transfers.
*This article was created by the MoneyCharger editorial team in accordance with their content creation policy . The legal text is from e-Gov Law Search (Financial Instruments and Exchange Act) , the information on companies under warning is from the Financial Services Agency's " Regarding the Names of Persons Conducting Financial Instruments Business Without Registration " (updated August 27, 2026), and the cautionary notices are from publicly available materials from the Financial Services Agency and the Consumer Affairs Agency , as confirmed on August 31, 2026. This article is for general informational purposes only and is not a substitute for individual legal or tax consultations.
If you are new to overseas forex trading,our complete guide for overseas forex trading beginners.
Overseas forex trading is not illegal | Regulations apply to the brokers, and there are no provisions to punish users
Whether or not overseas forex trading is "illegal" depends on whose actions are being questioned.It is not illegal for users to open accounts and trade based on their own judgment, but it is illegal for unregistered brokers to solicit Japanese residents. This distinction forms the basis of this entire article.
The Financial Instruments and Exchange Act regulates "those who conduct business in the course of their business" (Articles 29 and 197)
Article 29 of the Financial Instruments and Exchange Act stipulates that "Financial instruments business may not be conducted by anyone other than those registered with the Prime Minister."The regulations apply to "those who conduct financial instruments business," that is, businesses. There is no registration requirement for FX users, and there are no provisions that punish users for using FX.
| article | Content | Relationship with overseas forex |
|---|---|---|
| Article 29 | Only registered individuals can conduct financial instruments business | Overseas businesses that conduct business with Japanese residents are also required to register |
| Article 197, Paragraph 1, Item 4-3 | Anyone who conducts financial instrument trading without registration in violation of Section 29 is subject to imprisonment for up to 10 years or a fine of up to approximately $62,500, or both (increased from up to 5 years and up to approximately $31,250 under the amendment effective August 12, 2026. For corporations, Section 207 imposes a fine of up to approximately $4,375,000) | Those who conduct business or solicitation without registration will be penalized. Users are not subject to penalties |
| Article 39 | Prohibition of businesses compensating for losses | Zero-cut is considered to violate this rule, which is why domestic FX brokers do not offer it. It is also one of the reasons why overseas brokers do not register for it |
The key point isthat "even if a company is located overseas, if it conducts financial instrument transactions as a business for the benefit of or with Japanese residents, it is required to register in Japan." Just because a company is located overseas does not mean that it is exempt from Japanese law.
While explanations on the internet state that "Article 63 prohibits the operation of unregistered businesses," Article 63 is a provision concerning special business for qualified institutional investors, etc., and is a separate provision from unregistered overseas forex trading. The prohibition of unregistered business and penalties should be read in Articles 29 and 197 (Paragraph 1, Item 4-3). Note that the penalties were raised from "up to 5 years and up to approximately $31,250" to "up to 10 years and up to approximately $62,500" in the amendment that came into effect on August 12, 2026, and many explanations still use the old figures
The Financial Services Agency and Consumer Affairs Agency's statement: "It is not illegal," but they are warning people to "avoid trading."
While the Financial Services Agency (FSA) does not consider user transactions illegal, it clearly warns against trading with unregistered overseas companies. It'simportant to understand that "not illegal" and "recommended" are two different things.
Even if a company is located overseas, if it conducts financial instrument transactions as a business for the benefit of or with Japanese residents, it is required to register as a financial instrument business operator (registration under Japan's "Financial Instruments and Exchange Act"). Conducting financial instrument business in Japan without registration is prohibited. (Violators are subject to penalties.)
It is difficult to ascertain the actual operations of unregistered overseas businesses, and even if problems arise, it is extremely difficult to pursue legal action against them. Therefore, please refrain from entering into contracts with unregistered businesses
Source:Financial Services Agency, "Beware of solicitations by unregistered overseas companies"(July 31, 2009; updated June 28, 2024)
There have been numerous incidents of trouble related to FX trading with unregistered financial instrument business operators (unregistered brokers). From a consumer protection standpoint, please do not trade with unregistered brokers
In short, the Japanese government's stance is,"We won't punish users, but we can't protect you if problems arise, so please don't use it." If you use overseas forex trading, you'll be accepting this lack of protection yourself.
It is illegal for unregistered overseas forex brokers to solicit Japanese residents
It is a violation of the Financial Instruments and Exchange Act for unregistered Japanese companies to solicit transactions from Japanese residents through Japanese-language websites, advertisements, social media, emails, etc.The Financial Services Agency and the Regional Finance Bureaus issue warning letters to such companies and make public their names, addresses, and service names (see the next chapter for details).
Even companies that offer Japanese language support while including a disclaimer stating "not for Japanese residents" can be subject to warnings if they are actually operating with Japanese residents. Many overseas forex brokers are in this situation, which is why the number of companies on the warning list continues to increase
Those being prosecuted are the "solicitors" | No cases of users being punished have been confirmed
To the best of our knowledge, there have been no cases of users being punished simply for using overseas forex trading services.Those who have actually been prosecuted are the unregistered operators who solicited clients within Japan. A prime example is the "Sky Premium" case.
| season | Progress |
|---|---|
| September 17, 2021 | The Securities and Exchange Surveillance Commission has filed a petition with the Tokyo District Court for a prohibition and suspension order against SKY PREMIUM INTERNATIONAL PTE. LTD. and one of its officers for violating the Financial Instruments and Exchange Act (unregistered financial instruments business) |
| December 8, 2021 | The Tokyo District Court issued a prohibition and suspension order |
| July 2024 | Four executives given suspended sentences by Fukuoka District Court (according to reports) |
| December 2024 | The Chief Financial Officer was summarily indicted for violating the Financial Instruments and Exchange Act and received a summary order from the Fukuoka Summary Court to pay a fine of approximately $6,250 (TBS NEWS DIG report) |
Zenta Nishida, 51, the Chief Financial Officer of "Sky Premium," was charged with violating the Financial Instruments and Exchange Act for conspiring with four other executives between 2019 and 2021 to solicit FX investments from six men and women in Japan without registering with the Financial Services Agency. On December 4, 2024, the Fukuoka District Public Prosecutor's Office summarily indicted him, and the Fukuoka Summary Court issued a summary order imposing a fine of approximately $6,250. The four executives also received suspended sentences
The Securities and Exchange Surveillance Commission has continued to file lawsuits against unregistered companies. In August 2025, a Seychelles company (Black Clover Limited) and its representative were subject to prohibition and suspension orders, and in July 2026, two companies in Osaka were also subject to prohibition and suspension orders (both for unregistered solicitation of collective investment schemes, etc.).The premise that "Japanese authorities cannot intervene because it is an overseas company" is not valid.
The fact that this punishment applies to the "recruiter" has a different meaning for users.If you introduce overseas forex trading to others and receive a commission, you could then become the "recruiter" yourself(see "Actions that become illegal for users" below).
Financial Services Agency's warning list | As of August 2026, there are 1,150 warnings, with approximately 500 related to FX trading
The Financial Services Agency (FSA) has published a list of companies to which it has issued warning letters, titled "Names of those conducting financial instrument business without registration."Our editorial department compiled the HTML version updated on August 27, 2026, and found that there were a total of 1,150 entries, of which 498 were related to "over-the-counter derivative transactions (FX, etc.)" and 433 were companies located overseas.
What does being on a warning list mean? It's a record that "the company solicited customers without registration," and does not indicate any illegality on the part of the user
Being placed on the warning list means that the Financial Services Agency (FSA) has confirmed that the company was soliciting Japanese residents without being registered in Japan. Thishas nothing to do with whether or not the user is acting illegally. On the other hand, since the listed company is outside the Japanese system, it means that they cannot expect any redress in case of trouble.
There are two points to note when reading the list. The National Consumer Affairs Center (Cross-Border Consumer Center) also notes the following:
- Some businesses not listed may be operating without registration(this applies only to businesses that were confirmed to be operating illegally at the time of the warning).
- The information provided is accurate as of the time of the warning and does not reflect the current business status, name, or address
The number of warnings has been increasing in recent years. Our editorial team has compiled the list by year, and found that warnings related to over-the-counter derivative transactions increased to 42 in 2024 and 47 in 2025, and as of August 27, 2026, 20 warnings have already been posted
Annual number of warnings issued by the Financial Services Agency regarding unregistered businesses (related to over-the-counter derivative transactions)
Warning list status of major overseas forex brokers (as of August 27, 2026)
Most overseas forex brokers with a large number of Japanese users are listed on the warning list.Our editorial team's results of cross-referencing the HTML versions by broker name and service name are as follows. The listing period is as indicated in the "Listing Period" column of the Financial Services Agency list. If the same broker is listed under multiple company names, the first listing is indicated, and the other company names and periods are listed in parentheses.
| Vendor (Service Name) | Names on the list | Publication period |
|---|---|---|
| XMTrading | Tradexfin Limited | August 2020 |
| Exness | Nymstar Limited | April 2023 |
| FXGT | 360 Degrees Markets Ltd. (GT Global Ltd. will become November 2025) | June 2020 |
| TitanFX | Titan FX Limited and others | August 2015 |
| AXIORY | Axiory Global Ltd. | June 2015 |
| BigBoss | Big Boss Financial Limited (Big Boss Holdings Company Limited was established in June 2023) | February 2017 |
| HFM(formerly HotForex) | HF Markets (SV) Ltd | August 2017 |
| Vantage | Vantage Global Limited (Vantage Prime Trading Limited in June 2024,Vantage Trading Ltd. in August 2026) | March 2023 |
| ThreeTrader | ThreeTrader Global Limited | August 2023 |
| IS6FX | TEC Solution Ltd (IS6 Technologies Ltd will become a joint venture in July 2026) | December 2021 |
| Traders Trust | TTCM Traders Capital Limited | April 2024 |
| DecodeFX | Decode Global Limited | September 2025 |
| OQtima | OQTIMA INT. LTD | May 2025 |
| Errante | Errante Securities (Seychelles) Ltd | August 2025 |
| Axi | AxiTrader Limited | January 2024 |
Using the same verification method, as of August 27, 2026,JadeFOREX,INFINOX, EBC, andDupoinwere not found on the list. However, as mentioned above, "not listed" does not mean "registered in Japan." These companies are not registered as financial instrument business operators in Japan.
Another often overlooked fact is thatthe list includes not only the brokers themselves, but also several overseas forex introduction and brokerage websites that "acted as intermediaries for over-the-counter derivative transactions." This is primary information demonstrating that those who introduce brokers also face legal risks.
Is it safe to use XMTrading even though it has received warnings?
XMTrading (XM Trading) received a warning in August 2020 because the Financial Services Agency (FSA) determined that the operating company had solicited Japanese residents without being registered in Japan; this does not mean that users are in violation of any law.TheExness,FXGTsame applies to other major brokers such as
The answer to "Is it okay?" requires separating legal issues from practical risks
| perspective | When using a company listed on the warning list |
|---|---|
| User's legal responsibility | You will not be punished for opening an account or conducting transactions |
| Protection in case of trouble | Relief from Japan's Financial Services Agency and judicial system cannot be expected (personal responsibility) |
| Trust protection | There is no legal obligation under Japanese law. Check whether the company has voluntarily prepared segregated accounts, trust protection, and compensation systems |
| Tax | Profits must be declared as miscellaneous income (regardless of registration status) |
It's not a case of "it's safe because it's not illegal" or "it's a scam because there's a warning." A more realistic approach is to assume minimal protection, keep the amount of money in your account to a minimum, and choose a broker based on their track record and fund management system
The safety and withdrawal practices of XMTrading are explained in the XMTrading reputation and reviews section , and how to interpret its license is explained in the list of overseas forex financial licenses
How to check the warning list and tips for searching
The warning list is available to anyone on the Financial Services Agency's official website.The HTML version is easier to search.
- Open the Financial Services Agency's document " Regarding the names, etc., of persons conducting financial instrument business without registration. "
- Select the "HTML version" (PDF and Excel versions are also available. If you only want to see overseas-based companies, select the PDF "Unregistered Overseas-Based Companies for which Warning Letters Have Been Issued")
- Use your browser's search function (Ctrl+F/⌘+F) to search for company names, service names, and domains
Here are three tips to avoid overlooking something in your search: ① Look for listings by the operating company name, not the site name (e.g., XMTrading isExnessas "Nymstar Limited"), listed as "Tradexfin Limited," ② Search using multiple spellings as they may vary between English and Japanese , and ③ Read the service name section ("The name of the service provided by this company is...") as some companies use multiple brand names or company names
Five reasons why overseas forex trading is considered "illegal and dangerous"
The reason why overseas forex trading is considered dangerous is not simply because it's "overseas," but because it's not protected by Japanese regulations, and because unscrupulous brokers and solicitors operate in that loophole. Here arefive reasons why.
| reason | nature |
|---|---|
| ① Not registered with the Japanese Financial Services Agency | It's unavoidable due to the structure. It can be mitigated by choosing the right contractor |
| ② Trust protection is not mandatory | There are significant differences in the financial management systems of each company |
| ③ Problems with withdrawal refusal and account freezing | This is a focus on unscrupulous businesses. It is necessary to distinguish this from legitimate refusals due to violations of terms and conditions |
| ④ High leverage leads to rapid losses | This can be managed through proper fund management |
| ⑤ Solicitation and fraud via social media/LINE | This can be avoided by choosing the right company and by refusing to use their services if you are solicited |
① Not registered with the Japanese Financial Services Agency, meaning no protection in case of trouble
Because overseas forex brokers are not registered in Japan, if a broker goes bankrupt or refuses to process withdrawals, the Japanese Financial Services Agency will not intervene, nor will you be compensated by a system like the Investor Protection Fund.This is the primary reason, and the other four stem from this.
As an example, in 2023, GEMFOREX, which had many users at the time (and was placed on the Financial Services Agency's warning list in October 2015), ceased operations while still suspending withdrawals, leaving many users without their funds recovered. This incident demonstrated the reality that such situations are not remedied under the Japanese system
② Trust protection is not mandatory
While domestic FX companies are required by the Financial Instruments and Exchange Act and Cabinet Office Ordinances to protect customer funds through trust arrangements, overseas FX brokers are not subject to this obligation.Many brokers only practice segregated management (keeping the broker's assets and customer assets separately), and there is no guarantee that all funds will be returned in the event of the broker's bankruptcy.
| item | Domestic FX | Overseas FX |
|---|---|---|
| Trust protection | Legal obligations | Not mandatory (optional implementation by the contractor) |
| Funds at the time of bankruptcy | Returned by the trust bank | It depends on the contractor's system. There is no guarantee if only separate sorting and management is provided |
| Third-party compensation system | investor protection fund | Some businesses join organizations such as the Financial Commission (with limits) |
The difference between segregated accounts and trust protection is explained in the section on trust protection in overseas forex trading
③ Even if withdrawal refusals or account freezes occur, it is difficult to pursue legal action
The main problems cited in the warnings issued by the Financial Services Agency and the Consumer Affairs Agency are "profits made but unable to withdraw," "withdrawal requests made but no refunds received," and "inability to contact the lender."Typical excuses used by unscrupulous lenders are as follows:
| Typical trouble | The contractor's excuse |
|---|---|
| Withdrawal request rejected | Vague reasons such as "insufficient identity verification" or "violation of terms of service" |
| Account suddenly frozen | The suspension was implemented under the pretexts of "unauthorized access" and "money laundering countermeasures." |
| You may be asked to pay additional taxes and fees when withdrawing funds | In reality, it's unnecessary. In many cases, payments are not withdrawn |
On the other hand, many instances of withdrawal refusals by reputable brokersdue to user violations of terms and conditions,. Withdrawal refusal does not necessarily equal fraud, so reading the terms and conditions before trading is a form of self-protection.
The causes of withdrawal refusals and how to deal with them are explained in detail in our article "Causes and Solutions for Withdrawal Refusals in Overseas Forex Trading ."
④ High leverage leads to rapid losses
While the maximum leverage for domestic FX trading is regulated at 25x for individuals, overseas FX trading typically offers leverage of 1,000x to unlimited.Although this offers higher capital efficiency, it also means that you can lose your margin much faster if the market moves against you.
The Financial Services Agency's warning also mentions "examples of companies using high leverage far exceeding Japan's domestic leverage regulations as a selling point to solicit FX trading." High leverage itself is not illegal, butnot falling for solicitations that use it as baitis the first step in avoiding dangerous brokers.
For information on leverage mechanisms and broker comparisons, please see our comparison of leverage for overseas forex brokers
⑤ Solicitations via social media/LINE, and scams impersonating legitimate businesses
Solicitations that begin with "SNS posts sharing success stories" or "strong recommendations from friends" are patterns that the Financial Services Agency has explicitly identified as problematic.Our access analytics for this article also show a large influx of searches for specific company names, such as "◯◯FX scam," indicating that fake websites impersonating legitimate companies and scams where people deposit money as instructed but are unable to withdraw it continue unabated.
The criteria for making a decision are simple:Do not deposit money into a broker, account, or investment group recommended by someone else, rather than a broker you researched and chose yourself.Simply doing this will prevent the majority of losses.
Japanese regulatory developments regarding overseas forex trading (as of 2026)
While there are no laws prohibiting overseas forex trading itself, several regulations affect users, and new regulations were implemented in 2026. Here arefive points to keep in mind to determine whether or not overseas forex trading is regulated.
| Regulations | Content | Impact on overseas forex users |
|---|---|---|
| Leverage regulations (2011-present) | The maximum leverage offered to individual traders by domestic brokers is 25 times | It can't compete with overseas brokers. This is the biggest differentiating factor for overseas forex brokers |
| Prohibition of compensation for losses (Article 39 of the Financial Instruments and Exchange Act) | Businesses are prohibited from compensating customers for their losses | Reasons why zero-cut protection is not offered in domestic FX trading |
| Warning against unregistered businesses (ongoing) | Warning letters issued and made public to overseas companies that solicit Japanese residents | The number of cases is increasing, with 42 in 2024 and 47 in 2025. Most major companies are already listed |
| Cross-border payment collection agency regulations (effective June 1, 2026) | Certain cross-border payment collection services are now classified as "exchange transactions" and are subject to registration as money transfer businesses (Amendment to the Payment Services Act, Act No. 66 of 2025) | This could affect the provision of deposit and withdrawal methods, such as domestic bank transfers. The transitional measures will be in effect until November 30, 2026 |
| Common Reporting Standards (CRS) | Tax authorities in different countries automatically exchange financial account information | Let's assume that profits from overseas accounts will be detected if they are not declared |
What are the cross-border payment collection regulations that will come into effect on June 1, 2026?
The amendment to the Payment Services Act (Act No. 66 of 2025), promulgated on June 13, 2025, came into effect on June 1, 2026. Under this amendment, certain cross-border payment collection services will be classified as "exchange transactions," requiring registration as a money transfer business.The Financial Services Agency has explicitly stated that "the application is not denied even to businesses located overseas."
In many cases, domestic bank transfers for overseas forex trading are handled by brokers designating the account of a domestic money transfer agent (collection agent) as the recipient of the transfer, and this amendment may affect that scheme.As a transitional measure, businesses that were operating before the enforcement date can continue for six months from the enforcement date (until November 30, 2026), and can continue thereafter if they apply for registration by the deadline.
Since the beginning of 2026, some overseas forex brokers have changed their handling of domestic bank transfers and certain wallets, but none of the companies have disclosed the reasons for the changes, so it cannot be definitively concluded that this regulation is the cause. As a fact of the system, please keep in mind that the transitional period ends on November 30, 2026
The primary regulatory information and the current status of deposit and withdrawal methods offered by each company are summarized in our comparison of deposit and withdrawal methods for 21 overseas forex brokers
Reasons why overseas forex brokers do not register with Japan's Financial Services Agency
Overseas forex brokers do not register with Japan because doing so would mean that Japanese regulations would apply directly to them, preventing them from offering core features of overseas forex brokers such as high leverage, zero-cut protection, and bonuses.In addition, the registration process itself incurs significant costs.
- Leverage is limited to 25x for individuals(1,000x to unlimited leverage cannot be offered).
- Zero-cut is considered to violate the prohibition against compensation for losses (Article 39) and therefore cannot be offered
- Account opening bonuses and deposit bonuses are subject to advertising and prize regulations
- Registration as a Type 1 Financial Instruments Business Operator requires a minimum capital of approximately $312,500, maintenance of a capital adequacy ratio of 120% or higher, an internal control system, and regular reporting
In other words, "not registering" is a systemic choice, and this creates both advantages (conditions) and disadvantages (less protection) for users
The overall picture of the advantages and disadvantages is explained in "8 Advantages and 5 Disadvantages of Overseas Forex Trading ," and the mechanism of zero-cut is explained in " No Margin Calls (Zero-Cut) in Overseas Forex Trading ."
7 actions by users that are illegal
While trading with overseas forex is legal as long as you use your own funds and only trade yourself, "involving others" or "concealing profits" is illegal even for users.Here are seven common mistakes that people often make unknowingly.
| act | The problematic law |
|---|---|
| ① Failure to declare profits | Income Tax Law (Penalty for failure to file, late payment penalty, heavy penalty, and criminal penalties in serious cases) |
| ② To introduce or solicit businesses in exchange for compensation | Financial Instruments and Exchange Act (Unregistered solicitation and brokerage) |
| ③ Collecting funds from others and investing them | Financial Instruments and Exchange Act (Collective Investment Scheme) / Investment Act |
| ④ Distribute buy/sell signals and position instructions | Financial Instruments and Exchange Act (Unregistered Investment Advisory and Agency Business) |
| ⑤ Using an account in someone else's name or repeatedly making suspicious deposits and withdrawals | Act on Prevention of Transfer of Criminal Proceeds (Transfer of bank accounts used for deposits and withdrawals, etc.), fraud, etc., violation of company regulations |
| ⑥ Offering EA (Expert Advisor/automated trading) for a fee | Financial Instruments and Exchange Act (investment advisory and agency business depending on the content) |
| ⑦ Earn rewards by offering copy trading services | Financial Instruments and Exchange Act (Investment Management Business and Investment Advisory Business) |
① Failure to declare profits (non-filing/tax evasion)
Profits from overseas forex trading are subject to comprehensive taxation as miscellaneous income, and salaried employees are required to file a tax return if their income other than salary exceeds approximately $1,250 per year.Failure to file a return may result in penalties for non-filing and late payment, and if deemed malicious, heavy penalties may be imposed, and tax evasion may even be subject to criminal penalties.
The assumption that "it's an overseas account so the tax authorities won't find out" is incorrect. The Common Reporting Standard (CRS) is in operation, which automatically exchanges financial account information with tax authorities in each country, and records of deposits into domestic banks are also kept
Tax rates, calculation methods, and filing procedures are explained in the Complete Guide to Taxes for Overseas Forex Trading
② Receiving a commission for introducing and recruiting businesses (affiliate marketing/IB)
Soliciting people to open accounts with unregistered overseas forex brokers and receiving compensation for it may constitute "solicitation" or "brokerage" under the Financial Instruments and Exchange Act, depending on the nature of the activity, and could be problematic as unregistered business.The Financial Services Agency's warning list includes several examples where not only the brokers themselves but also referral sites that "acted as intermediaries for over-the-counter derivative transactions" are listed.
The line between "simply sharing information" and "receiving a commission for soliciting account openings" is determined by the content published, the form of compensation, and the method of solicitation. This is also relevant when posting referral links on blogs or social media
The legal issues surrounding affiliate marketing and IB (Introducing Broker) are explained in detail in the article " Is Overseas Forex Affiliate Marketing Illegal?"
③ Collecting funds from others and managing them on their behalf
If you collect funds from friends and acquaintances to invest in overseas forex trading and promise to distribute the profits, this could fall under the category of collective investment schemes under the Financial Instruments and Exchange Act or the Investment Act.Many of the cases for which the Securities and Exchange Surveillance Commission has filed prohibition orders with the courts fall into this category.
"Because they're family" or "because it's a small amount" are not valid excuses. The only safe way to trade overseas forex is with your own funds, in your own account, and within the bounds of your own responsibility
④ Distribute buy/sell instructions through online salons and social media
Providing trading signals or position instructions through paid salons or groups constitutes investment advisory and agency services, and doing so without registration is illegal.Even if it's free, if you earn referral rewards by requiring participants to open a specific overseas FX account, it may be considered essentially paid advice or solicitation.
The same applies to live FX trading broadcasts. The approach differs depending on whether the content is limited to explaining market trends or encouraging viewers to make specific buy or sell decisions. It is best to limit information dissemination to general market commentary and educational content, and avoid giving specific buy or sell instructions
⑤ Using accounts under someone else's name or repeatedly making suspicious deposits and withdrawals (money laundering)
Transactions using accounts in someone else's name, or repeated large deposits and withdrawals without legitimate reason, can not only be subject to criminal penalties, such as the transfer of bank accounts used for deposits and withdrawals being a violation of the Act on Prevention of Transfer of Criminal Proceeds, but also constitute a violation of the broker's terms and conditions, which can be a legitimate reason for account freezing and refusal of withdrawals
It is important to use an account in your own name and to be able to explain the source of your funds. This is important not only from a legal standpoint but also to avoid withdrawal problems
⑥ Selling or renting EAs (automated trading systems) for a fee
There is no problem with using an EA yourself, but if you provide it to a third party for a fee or purchase price, depending on the content, you may need to register as an investment advisor or agent.Selling or renting it without registration may be a violation of the Financial Instruments and Exchange Act.
⑦ Earn rewards by offering copy trading services
A company that provides a system to automatically copy other people's trades and earns a commission for it may be considered an investment management business or an investment advisory business.Using a broker's copy trading function as a user is not illegal, just like trading in overseas forex.
How to distinguish between illegal and fraudulent copy trading: What is FX copy trading? We explain its illegality and potential for fraud
How to identify a trustworthy overseas forex broker: 5 key points to check
Since they are not registered in Japan, you have no choice but to verify the reliability of the company yourself based on five points: "license in their country of origin," "fund management system," "operational track record," "Japanese language support," and "whether or not they engage in solicitation."Let's look at them in order.
① Financial licenses in the base country and the strength of their regulations
The first thing to check is which country's financial authority license the company holds to operate its services to Japanese residents.The strictness of the license requirements varies greatly depending on the issuing country.
| Country/Region | issuing authority | Features |
|---|---|---|
| England | FCA | Strict regulations worldwide. Mandatory segregation and regular reporting of customer funds |
| Australia | ASIC | Capital requirements, trust protection of customer funds, and qualification assessment of directors |
| Cyprus | CySEC | Compliant with EU regulations (MiFID II). EU passport |
| Seychelles, Mauritius, Belize, etc | FSA/FSC | Offshore. The requirements for obtaining this status are relatively lenient, and operating companies targeting Japanese residents are often located here |
It's important to note thateven if a group company holds an FCA or ASIC license, the operating company that manages accounts for Japanese residents is generally licensed offshore. Please check which legal entity and license your account is under.
For a comparison of the reliability of each license, please see our list of financial licenses for overseas forex trading
② Fund management system (separate management, trust protection, compensation system)
Check the official website to see which of the following is clearly stated: "segregated accounts," "trust protection," or "membership in the Financial Commission (with compensation limits)."The outcome in the event of bankruptcy will differ between a company that only offers segregated accounts and one that also provides compensation from a third-party institution. It is best to avoid companies that do not clearly state this.
③ Operating performance and withdrawal record
The longer a company has been operating and the more evidence of substantial withdrawals can be found through third-party reviews, the lower the risk of it suddenly disappearing.Conversely, you should avoid companies that are newly established, have an unknown location or representative, or have multiple reports of the same withdrawal problems.
④ Existence of Japanese language support
It's best to inquire and confirm whether the Japanese-language chat and email support is actually functioning before opening an account.The National Consumer Affairs Center of Japan also advises checking contact information before signing a contract, stating that "there are cases where a Japanese-language telephone support line is listed but is actually unreachable."
Information on Japanese language support is compiled in the list of overseas forex brokers that offer Japanese language support
⑤ Have you been solicited by a company or a third party?
If you are advised via social media, LINE, or phone to "open an account with this company," do not deposit any money, no matter how well-known the company is.Fake websites that impersonate real companies, or schemes that trick you into sending money to a specific account, are a separate issue from the trustworthiness of the company itself. The principle is to search for the official website yourself and open an account yourself.
Where to seek advice if you encounter problems with overseas forex trading
There are three levels of resources for seeking advice: "First, contact the Consumer Affairs Consultation Service (188)," "If it's serious,contact a lawyer," and "For system-related issues or reporting, contact the Financial Services Agency." The Financial Services Agency's office does not mediate or mediate individual disputes, so if refund negotiations are necessary, you should use them in conjunction with a lawyer.
| Where to seek advice | Suitable consultations | contact address |
|---|---|---|
| Consumer Hotline (Consumer Affairs Center) | Initial consultation regarding issues such as non-withdrawal of funds or inability to contact the company. When you don't know where to seek advice | No area code 188 |
| Financial Services Agency, Financial Services User Consultation Office | System verification, verification of whether businesses are registered, and provision of information on unregistered businesses | 0570-016811 (IP phone 03-5251-6811) Weekdays 10:00-17:00 |
| Financial Services Agency's "Consultation Hotline Regarding Fraudulent Investments" | Information provided when you receive solicitations from unregistered businesses | 0570-050588 (IP phone 03-6206-6066) Weekdays 10:00-17:00 |
| Lawyer (Legal Aid Center - Legal Consultation Website) | Considering negotiating a refund, claiming damages, or filing a criminal complaint | Legal Aid Center 0570-078374 / Search for "investment fraud lawyer [your region]" |
When searching for a lawyer,if they have specific examples of handling FX and investment fraud cases, and if their fees and whether they offer free consultations are clearly stated. Some firms claim to be "strong in investment fraud" but have little experience. Keeping evidence (deposit and withdrawal records, correspondence with the company, screenshots of solicitations) will expedite the process at any legal consultation center.
If safety is your priority | 3 overseas forex brokers to choose from based on operational track record and fund management system
Based on operational track record, licensing, and fund management systems, I will list three companies that are popular among Japanese users.As mentioned earlier, all three companies are on the Financial Services Agency's warning list and are not registered in Japan. Please compare their systems with this in mind.
XMTrading | The most popular platform among Japanese users, with abundant information
| Establishment | 2009 (Trading Point Group) |
| Operating company for Japanese residents | Tradexfin Limited (Seychelles FSA) / Fintrade Limited (Mauritius FSC) |
| Fund management | Separate management |
| Financial Services Agency warning list | Listed (August 2020, Tradexfin Limited) |
| Manecha CB | Not applicable |
XMTrading is said to be the broker with the most Japanese users, and its strengths include extensive Japanese language support and information available in Japanese. While its group companies hold licenses such as CySEC and ASIC, please understand that accounts for Japanese residents are managed by companies in Seychelles and Mauritius
For reviews and testimonials, please see the XMTrading reviews page
Exness| Publicly available financial information that has been externally audited, with compensation scheme in place
| Establishment | 2008 |
| Operating company for Japanese residents | Nymstar Limited (name on the Financial Services Agency list, Seychelles), and others. The responsible company for Japanese residents can be found in the footer of the account screen |
| Fund management/compensation | Segregated accounts / Member of the Financial Commission (up to €20,000 in compensation per customer) |
| Financial Services Agency warning list | Published (April 2023, Nymstar Limited) |
| Manecha CB | correspondence |
Exnessis among the most transparent overseas forex brokers, as it publishes financial information and trading volume that have been subject to external audits. Its participation in a third-party compensation system also sets it apart from brokers that only rely on segregated accounts
As of August 2026, we have confirmed that it is not possible to accessExnesspublic website from Japanese IP addresses. Please check the latest trading conditions and deposit/withdrawal methods on your member page after registration
For reviews and testimonials, please see Exnessthe reviews section on
AXIORY| Participates in compensation scheme and accepts corporate accounts
| Establishment | 2011 |
| Operating company | Axiory Global Limited (Belize FSC) |
| Fund management/compensation | Segregated accounts (official designation) / Member of the Financial Commission (up to €20,000 in compensation per customer) |
| Financial Services Agency warning list | Published (June 2015,Axiory Global Ltd.) |
| Manecha CB | correspondence |
AXIORYisit publicly discloses its segregated management of customer funds and third-party audits of deposits and withdrawals, andis also a member of a compensation system. It is also highly rated for its support of corporate accounts and execution speed, and is a popular choice among intermediate and advanced traders.
For reviews and testimonials , please see AXIORY's reputation page . For a comparison of the safety of more brokers, please see the overseas FX broker safety ranking
If you open an account through Moneycha, you can receive cashback with every trade
Frequently Asked Questions about the Illegality of Overseas Forex Trading
Q. Is it illegal to use overseas forex trading while living in Japan?
It is not illegal. If you ask "Is FX illegal?" or "Is FX legal?", the answer is yes, it is legal for users.The registration obligation under the Financial Instruments and Exchange Act is imposed on brokers, and there are no provisions to punish users for trading with overseas FX brokers.
However, the Financial Services Agency and the Consumer Affairs Agency have warned against trading with unregistered overseas companies, stating that pursuing legal action in case of trouble is extremely difficult. Please be sure to remember these two points: that you are responsible for your own actions, and that you have an obligation to declare any profits
Q. Is it safe to use XMTrading and other services that are on the Financial Services Agency's warning list?
The warning is against "the broker soliciting customers without registering in Japan," and does not mean that the user is in violation of any law.including XMTrading (August 2020),Exness,FXGT, TitanFX, andAXIORYMany major brokers are listed,
The question of whether something is "safe" depends on the assumption that there is no protection under the Japanese system, and the assessment will be based on the company's operational track record, fund management system, and withdrawal history. The basic principle is to keep the amount of money in the account to the absolute minimum necessary
Q. What happens if I don't declare my profits from overseas forex trading?
Failure to file a tax return will result in penalties for non-filing and late payment. If it is determined to be intentional concealment, a heavy penalty will be imposed, and in serious cases, it may be considered tax evasion and subject to criminal penalties.Profits from overseas forex trading are subject to comprehensive taxation as miscellaneous income.
Because of the international exchange of financial account information under the Common Reporting Standard (CRS) and records of deposits to domestic banks, the assumption that "it's an overseas account so we can't know" is not valid. Salaried employees are required to file a tax return if their income other than salary exceeds approximately $1,250 per year
Q. Is it illegal to earn commissions through affiliate marketing or IB (Introducing Broker) for overseas forex trading?
Depending on the nature of the referral and the form of compensation, it may constitute "solicitation" or "brokerage" to unregistered businesses, which could be problematic under the Financial Instruments and Exchange Act.The Financial Services Agency's warning list includes several examples of referral and brokerage sites that were found to have "brokered over-the-counter derivative transactions."
It's not a matter of "uniformly illegal" or "uniformly legal"; judgments vary depending on the content posted, the manner of solicitation, and how compensation is received. For individual judgments, please consult a lawyer. A summary of the issues is explained in " Is Overseas FX Affiliate Marketing Illegal?"
Q. Is it illegal to provide live streaming or copy trading services for Forex trading?
If you encourage viewers to make specific trades or earn commissions by providing copy trading services, you may need to register as an investment advisor/agent or investment management business; otherwise, it is illegal
There is a line between simply providing market commentary and showing one's own trades, and giving instructions like "buy now" or "copy this position." If a service encourages the opening of specific overseas forex accounts through its broadcasts and earns a commission for doing so, then the issue of solicitation and intermediation arises
Q. I heard that forex trading is prohibited in the United States. Is that true?
While forex trading isn't prohibited in the United States, many overseas forex brokers don't accept account applications from US residents because only brokers registered with US authorities (CFTC and NFA) can trade with US residents.This is why it's often said that "Americans can't use overseas forex trading."
In Japan, while there are registration requirements and penalties for brokers, there are no provisions to punish users, which means that Japanese residents can use overseas forex brokers. Please understand that the regulatory framework differs from country to country
Q. Is there a possibility that overseas forex trading will be completely banned or regulated in Japan?
As of August 2026, no legal amendments have been announced to prohibit users from using overseas forex brokers.However, the number of warnings issued to brokers has been increasing, with 42 in 2024 and 47 in 2025. Furthermore, regulations on brokers and settlement providers are strengthening, including the implementation of cross-border payment processing regulations on June 1, 2026.
A more realistic and direct impact on users is a "change in deposit and withdrawal methods" rather than a "ban." Regularly check whether the deposit and withdrawal methods of the service provider you are using have changed
Summary | Overseas forex trading is not illegal, but use it with the understanding that there is "no protection"
This document summarizes the legality of overseas forex trading based on relevant laws and primary sources from the Financial Services Agency and the Consumer Affairs Agency. The key points are as follows:
- It is not illegal for users to trade with overseas forex brokers. The regulations and penalties (Articles 29 and 197) apply to unregistered brokers who solicit traders.
- The Financial Services Agency's warning list contains 1,150 items (as of August 27, 2026), with approximately 500 related to FX trading. While most major brokers are listed, this does not indicate illegal activity on the part of users, but rather a lack of protection.
- There are also illegal activities on the user's side: failure to declare, referrals for compensation, soliciting investments, distributing trading instructions, using accounts under someone else's name, and providing EA/copy trading services for a fee.
- Regulations are in motion, such as the payment collection agency regulations that will come into effect on June 1, 2026.The impact will likely manifest as "changes in deposit and withdrawal methods" before any outright bans.
- Choose a service provider based on their license in their country of origin, their financial management system, and their operational track record. Do not deposit money with any service providers recommended to you. In case of trouble, consult 188 (a Japanese online banking service), then the Financial Services Agency, and finally a lawyer.
If you're still at the stage of wondering "Is it illegal?", the answer is "It's not illegal." The next thing to consider is "How to protect yourself in the absence of protection," which boils down to choosing the right company, managing your finances, and avoiding becoming a recruiter yourself
If you're choosing based on your fund management system,ExnessandAXIORY, which have compensation systems, are cashback-eligible providers through MoneyChat
For a list of AXIORYcashback providers including , please refer to the list of participating providers . For instructions on registering for Moneycha, please refer to the Moneycha user registration procedure
The reasons why people say "stay away from overseas forex trading," the characteristics of people who shouldn't trade overseas forex , and an overall overview before starting are all explained in the Complete Guide to Overseas Forex for Beginners
*The legal texts in this article were obtained from e-Gov Law Search, the listing status of companies under warning was confirmed on August 31, 2026, in the Financial Services Agency's "Regarding the Names of Persons Conducting Financial Instruments Business Without Registration" HTML version (updated August 27, 2026), and the warnings were confirmed in the publicly available materials of the Financial Services Agency, the Consumer Affairs Agency, and the National Consumer Affairs Center. The regulations on cross-border payment collection are based on the Financial Services Agency's "Regarding the Promulgation of the Cabinet Order Concerning the Amendment to the Payment Services Act in 2025 and the Results of Public Comments" (May 22, 2026). Laws, warning lists, and the conditions of each company are subject to change, so please check the latest information on each official website. This article is for general informational purposes only and is not a substitute for individual legal or tax consultations
