Japan's Financial Services Agency expressed concern over the high number of fraudulent transactions involving crypto assets.
The Financial Services Agency (FSA), Japan's financial regulator, has proposed several measures to protect users from "unlawful 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 protection.
One of the proposed initiatives involves "strengthening monitoring of unlawful 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's name is different from the account name." In practice, this could disrupt P2P transactions, as the names of the sender and receiver on the fiat and crypto ends of the transaction are typically different.
The FSA's request is currently a recommendation rather than a mandatory requirement, and it remains to be seen how banks will respond.
This development comes amid Japan's ongoing efforts to spur innovation and growth in the digital asset industry. In December 2023, the government announced changes to its crypto tax policy, exempting companies from tax on long-term crypto holdings. However, the bill is still pending approval by both chambers of the Japanese parliament.
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