FSA clarifies position on P2P crypto transactions amidst latest recommendations to banks


  • Japan’s FSA recommends banks tighten rules for crypto transactions, aiming to stop fraud.
  • The new rules might affect peer-to-peer transfers, making it harder for some users.
  • South Korea also takes action against crypto fraud, introducing a freeze on suspicious transactions.

The Financial Services Agency (FSA) of Japan provides clarity on peer-to-peer (P2P) crypto transactions following recent recommendations to local banks, emphasizing enhanced user protection measures.

FSA’s recommendations on P2P crypto transactions

In response to concerns regarding potential fraudulent activities in the crypto space, Japan’s Financial Services Agency (FSA) has issued recommendations to local banks to bolster user protection. On February 14, the FSA urged banks to heighten their scrutiny on transactions involving crypto-asset exchange service providers, particularly emphasizing instances where the sender’s name differs from the account name.

In a statement addressing inquiries from Cointelegraph, the FSA clarified that its recommendations do not encompass individual transactions. The agency emphasized that the focus is preventing unlawful money transfers, particularly when an individual deposits cash from their bank account into an account associated with a crypto asset exchange service provider.

Impact on P2P transfers

The FSA’s stance, while aiming to curb illicit activities, might inadvertently affect P2P transfers in Japan. Typically, such transfers involve distinct users on both the sender and receiver end. However, the new recommendations raise concerns as they could hinder transactions where the sender and account name do not align.

The FSA’s directives aim to thwart fraudulent schemes orchestrated by malicious actors seeking to exploit discrepancies in account names to facilitate illicit transfers. An illustrative scenario involves a fraudster persuading a victim to change their name to the fraudster’s identity to bypass the platform’s restrictions on accepting deposits from third parties.

Multiple financial institutions have already implemented measures aligned with the FSA’s recommendations to fortify their defenses against unlawful money transfers. While the FSA acknowledges these proactive steps, it has not received any reports of concrete cases raising concerns regarding crypto asset markets.

Flexibility in implementation

It’s important to note that the FSA’s recommendations are not universally mandated across all financial institutions. Banks are expected to assess their circumstances and adopt appropriate measures to address potential vulnerabilities in their systems.

Japan’s neighbor, South Korea, is also stepping up efforts to combat crypto fraud. The country’s Financial Intelligence Unit plans to introduce a preemptive trading suspension system for suspicious transactions on platforms operating within its jurisdiction. This initiative aims to freeze transactions during the pre-investigation phase, bolstering regulatory oversight in the crypto space.

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Ibrahim Abdulaziz

A fervent advocate, Ibrahim shares his wealth of knowledge on crypto and blockchain technology in an engaging and informative style. He frequents places where influencers gather for his next scoop. His vision is that the decentralized nature, security features, and potential for financial inclusion will drive widespread massive crypto adoption.

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