Key takeaways:
- Japan’s main financial regulator, the FSA, has recommended a number of steps to shield customers against “unlawful transfers” to crypto exchanges.
- Banks are urged to “further tighten their user’s protection” by the FSA and the National Police Agency (NPA).
Japan’s main financial regulator, the Financial Services Agency (FSA), has recommended a number of steps to shield customers against “unlawful transfers” to cryptocurrency exchanges. One of them could significantly exacerbate the market for peer-to-peer (P2P) transactions.
The FSA published a request to Japanese banks on February 14. The regulator claims that there are still a lot of fraudulent transactions occurring in the nation, with cryptocurrency assets being involved in the majority of them.
For this reason, banks are being urged to “further tighten their user’s protection” by the FSA and the National Police Agency (NPA). The FSA and NPA mention a number of important actions in order to accomplish this.
One of them, which instructs banks to increase their oversight of unauthorized transactions to companies that offer crypto-asset exchange services, doesn’t say much. The P2P market can be severely disrupted by the other. As recommended by the regulator:
“Stopping transfers to crypto-asset exchange service providers if the sender’s name is different from the account name.”
The news release’s Japanese translation, which explains that individual and business accounts should be included in the suspension of such transactions, utilizes the verb refuse.
The mechanics of such transactions suggest that the sender and recipient on the fiat and crypto sides of the transaction are always distinct, as users of P2P networks are aware. Therefore, the P2P market could be significantly jeopardized if Japanese banks refuse any transactions from one person’s bank account to another person’s cryptocurrency wallet.
Note that the current FSA request refers to initiatives rather than requiring compliance with specific requirements; it is written as a recommendation. It remains to be seen how the banks will respond to these suggestions and if they will cause any disruptions to the P2P economy.
The Japanese government announced proposed tax regulations in December 2023 that would exempt businesses from paying taxes on their cryptocurrency holdings’ “unrealized gains.” The House of Representatives and the House of Councillors, the two houses of the Japanese parliament, still need to pass the law.
