While cryptocurrency trading continues to expand, incidents of hacking and fraud remain rampant. In April 2026, Japan's Financial Services Agency (FSA) published its "Policy Framework for Strengthening Cybersecurity in Crypto Asset Exchange Services," mandating that operators implement measures under a "self-help, mutual aid, and public assistance" framework. This approach reflects the unique characteristics of crypto assets, where attackers can instantly steal assets and move funds across borders. This article explains the basic security measures individual investors should practice, incorporating the latest trends from 2026. For guidance on choosing an exchange, please also refer to our Comparison of Crypto Asset Exchanges.
Implementing Two-Factor Authentication (2FA)
Two-factor authentication requires a one-time code or biometric verification in addition to your password. Japan's Financial Services Agency (FSA) guidelines also recommend that crypto exchanges implement multi-factor authentication.
- Using an Authenticator App: Apps installed on your smartphone, such as Google Authenticator or Authy, are recommended. Avoid SMS-based authentication whenever possible, as it carries the risk of SIM swap fraud.
- Hardware Security Keys: Physical keys like YubiKey are more secure because they are resistant to phishing attacks.
- Important Note: Even if you set up two-factor authentication, you can still lose your assets if your private key or seed phrase is compromised. Treat 2FA as an additional layer of defense, not a complete safeguard.
Strong Password Management
Passwords are the foundation of all security.
- Make them long and complex: Use at least 16 characters, combining uppercase and lowercase letters, numbers, and symbols.
- Avoid reusing passwords: Set a different password for each trading platform.
- Use a password manager: Tools like LastPass or 1Password allow you to securely manage strong passwords.
- Change passwords regularly: Consider updating them if a breach is suspected or if they haven't been changed in a long time.
Using Cold Wallets
A cold wallet is a method of storing private keys offline, disconnected from the internet. It is recommended to manage long-term cryptocurrency holdings using a cold wallet.
- Hardware Wallets: Dedicated devices such as Ledger or Trezor. Purchase only from official websites and be cautious of counterfeit products.
- Paper Wallets: Private keys or QR codes printed on paper. However, be aware of risks such as printer history logs and potential loss of the physical paper.
- Important Note: Even with cold wallets, managing your seed phrase (recovery phrase) is crucial. Store your seed phrase offline in a secure location, and avoid keeping digital copies (such as screenshots).
FSA's 2026 Policy and Industry Initiatives
In April 2026, Japan's Financial Services Agency (FSA) established a cybersecurity enhancement policy for crypto asset exchange service providers. This policy outlines a framework requiring exchanges to implement hacking countermeasures based on three pillars: "self-help" (strengthening internal measures), "mutual assistance" (collaboration with industry bodies), and "public assistance" (regulatory oversight and support). Specifically, the Japan Virtual and Crypto Assets Exchange Association (JVCEA) has strengthened its mechanism to verify compliance with self-regulatory rules through audits. For individual investors, choosing domestic exchanges that adhere to these regulations ensures a certain level of security.
Other Points to Note
- Phishing Scams: Be cautious of emails or SMS messages pretending to be from exchanges. Always type the official website URL directly into your browser.
- Social Engineering: There are tactics on social media where scammers pose as offering "great deals" to trick you into revealing your private keys. Never share your private keys or passwords with anyone.
- Exchange Security: When choosing an exchange, check its history of past hacks, whether it has insurance, and the proportion of assets held in cold wallets.
- Risk Awareness: Cryptocurrencies are subject to significant price volatility and carry the risk of losing your principal. Additionally, there is always the possibility of asset loss due to hacking or user error.
Summary
When it comes to cryptocurrency security, it is essential not to leave everything to the broker but to take protective measures yourself. Make it a rule to enable two-factor authentication, use strong passwords, and manage long-term holdings in cold wallets, while staying up to date with the latest threat information. Thanks to the Financial Services Agency’s 2026 policy direction, the overall security standards in the industry are improving, but the ultimate safety of your assets depends on your own actions. If you are unsure which exchange to choose, refer to our cryptocurrency exchange comparison.
Risk and Disclosure
Risk: Crypto assets are subject to high price volatility and carry the risk of losing your entire principal. This article is a general explanation based on information as of 2026-07-18 and does not constitute investment solicitation, advice, or a recommendation of any specific asset. Trading eligibility and tax treatment vary by country/region, so please be sure to check the regulations in your country of residence and the latest terms of each exchange before use.
Affiliate Disclosure: This article may contain advertising (affiliate) links, and our site may receive compensation at no additional cost to the reader. Compensation does not affect the content of our evaluations.
Frequently Asked Questions
Should I always enable two-factor authentication?
Yes. Two-factor authentication is a critical measure that protects your account even if your password is compromised. We recommend using an authenticator app or hardware key. SMS authentication carries a risk of SIM swapping, so avoid it if possible.
What is the difference between a cold wallet and a hot wallet?
A cold wallet stores private keys offline, making it highly resistant to hacking. A hot wallet is always connected to the internet, offering convenience for transactions but with higher attack risk. For long-term storage, a cold wallet is more suitable.
How do the FSA's 2026 policies affect individuals?
The FSA's policies primarily target exchanges, but as a result, security standards at domestic exchanges will improve, providing a safer trading environment for users. However, individual measures like two-factor authentication remain important.
Can I recover my assets if I lose my seed phrase?
No. The seed phrase is essential for restoring your private keys. If lost, neither the wallet provider nor the exchange can recover it. Always store multiple offline copies in secure locations and avoid digital copies.
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