When choosing an overseas exchange, safety matters as much as fees and leverage, if not more. Without FSA registration you cannot rely on domestic investor protection, so the exchange's own disclosure and your own settings are what protect you.
This guide lists what to check before and while using an exchange: the operating entity, proof of reserves, asset custody and account self-protection.
Check the operating entity and registration
Check whether the terms of use or legal pages name the entity you contract with and where it is registered. Some exchanges only disclose this in the terms.
- The terms of use name the contracting entity
- Registration or licences are explained
- Residents of Japan are not excluded in the terms
- Whether the exchange appears in the FSA's warnings about unregistered operators
Check how assets are held
Check the exchange's published information on how client assets are stored and whether they are separated from the exchange's own assets. Many exchanges now publish a proof of reserves (PoR) with third-party verification showing reserves that exceed client balances.
- Whether a proof of reserves is published and how often it is updated
- The stated share of assets in cold storage
- Insurance fund or compensation policy for incidents
- Past major incidents and how they were handled
Proof of reserves and insurance funds help you assess safety but do not guarantee withdrawals or compensation. Keep only what you need on the exchange rather than leaving large balances for long periods.
Protect your own account
- 01Enable two-factor authentication
Use an authenticator app (TOTP) rather than SMS, and store the backup codes safely.
- 02Set a withdrawal whitelist
Restrict withdrawals to registered addresses and enable the waiting period for new entries.
- 03Set an anti-phishing code
A code shown in genuine exchange emails helps you spot fake ones.
- 04Review login history and API keys
Delete unused API keys and change your password if you see an unfamiliar login.
Check the entity and custody information of the listed exchanges
Frequently asked questions
Q. Is an exchange safe if it publishes proof of reserves?
A. It shows reserves covering client balances, but not the full liability picture or the soundness of the business. Assess it together with the entity, terms and past conduct.
Q. What happens to my assets if the exchange stops service?
A. Usually a withdrawal window is provided, but treatment varies. Follow official announcements and withdraw what you need early.
Q. Does Japanese-language support mean the exchange is safe?
A. Ease of contact matters but is separate from safety. Check the entity, custody and security features first and treat support as an additional factor.
Sources and conditions
FX Textbook is an independent information site, not an exchange or a provider of personal investment advice. Crypto-asset trading involves risk: price moves, liquidation of leveraged positions, transfer errors and exchange operating risk can result in the loss of some or all invested capital.
NEXT STEP
Once you know the mechanics, compare the exchanges.
Spot and futures fees, maximum leverage, liquidation rules and Japanese-language support, organised exchange by exchange.
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