The Financial Services Agency (FSA), Japan’s primary financial regulator, has clarified its stance on peer-to-peer (P2P) cryptocurrency transactions following its recent recommendations to local banks.
In a letter dated February 14, the FSA urged banks to enhance user protection by halting transfers to crypto-asset exchange service providers if the sender’s name differs from the account name. This recommendation could potentially impact P2P transfers in Japan, as these transactions typically involve two different users on the sender and receiver sides.
In response to an inquiry from Cointelegraph, the FSA clarified that its recommendation does not cover transactions between individuals. However, it aims to address a potential scenario where a fraudster, identified as X, convinces their victim, identified as Y, to deposit funds from Y’s bank account into X’s newly created crypto account. To bypass the platform’s restriction on accepting deposits from another person’s account, the fraudster would persuade Y to change their name to X. Under the new recommendations, the bank would block the suspicious transaction if the sender requests a name change from Y to X for the purpose of depositing funds into the crypto platform.
The FSA stated that several financial institutions have already implemented these measures, but it has not received any reports of specific cases that raise concerns about the crypto asset markets.
The FSA’s recommendations are not mandatory for all financial institutions. Each bank is expected to assess its individual circumstances and decide on appropriate measures.
Japan’s neighboring country, South Korea, is also taking proactive measures to combat cryptocurrency fraud. Its Financial Intelligence Unit plans to introduce a preemptive trading suspension system for suspicious transactions on platforms operating in the country. This system will freeze transactions even during the pre-investigation phase.