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Japanese FSA pushes for stricter monitoring of ‘illegal transfers’ to crypto exchanges
Japanese FSA pushes for stricter monitoring of ‘illegal transfers’ to crypto exchanges
The Financial Services Agency (FSA), Japan’s financial regulator, has proposed several measures to protect users from “illegal transfers” to cryptocurrency exchanges.
In a request To Japanese banks on February 14, the FSA expressed concern over the high number of fraudulent transactions involving crypto assets and encouraged banks to strengthen user protections.
One of the proposed initiatives is to “strengthen monitoring of illegal transfers to crypto-asset exchange service providers.”
However, another proposal has raised concerns among P2P market participants. The FSA suggests “stopping transfers to crypto-asset exchange service providers if the sender name is different from the account name.” In practice, this could disrupt P2P transactions, because the names of the sender and recipient on the fiat and crypto ends of the transaction are usually different.
The FSA’s request currently constitutes a recommendation rather than a mandatory requirement, and it remains to be seen how banks will respond.
The development comes as part of Japan’s ongoing efforts to drive innovation and growth in the digital assets sector. In December 2023, the the government announced changes to its crypto tax policy, exempting companies from tax on long-term crypto holdings. However, the bill still awaits approval from both houses of Japan’s parliament.