The Financial Services Agency (FSA), Japan’s primary financial regulator, has provided clarification on peer-to-peer (P2P) crypto transactions in light of its recent recommendations to local banks.
In a letter dated February 14th, the FSA urged banks to enhance user protection by blocking transfers to crypto-asset exchange service providers if the sender’s name differs from the account name. This could potentially impact P2P transfers in Japan, as these transactions typically involve two distinct users on the sender and receiver sides.
In response to an inquiry from Cointelegraph, the FSA clarified that its recommendations do not pertain to transactions between individuals. Instead, it aims to address fraudulent scenarios where a fraudster, known as X, persuades a victim, known as Y, to deposit funds from their bank account into X’s newly created crypto account. To bypass the platform’s restrictions on accepting deposits from different individuals, X would convince Y to change their name to X so that the transaction is accepted. However, under the new recommendations, the bank will block suspicious transactions where the sender requests a name change from Y to X in order to deposit funds into the crypto platform.
While several financial institutions have already implemented these measures, the FSA has not received any reports of specific cases that would raise concerns about the crypto asset markets. These recommendations are not mandatory for all financial institutions, as banks are expected to assess their own circumstances and determine appropriate measures.
Meanwhile, South Korea, Japan’s neighboring country, is also taking proactive steps to combat crypto fraud. Its Financial Intelligence Unit plans to introduce a preemptive trading suspension system for suspicious transactions on platforms operating within the country. This system will freeze transactions even during the pre-investigation phase.
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