The Financial Services Agency (FSA), Japan’s primary financial regulatory body, has proposed several steps to safeguard users against unauthorized transfers to cryptocurrency exchanges and one of these measures could significantly disrupt the peer-to-peer (P2P) transactions sector.
The agency issued a request to Japanese banks on February 14, citing a persistently high number of fraudulent transactions in the country, with a significant portion involving cryptocurrency assets.
As a result, the FSA and the National Police Agency (NPA) are urging banks to enhance user protection measures. To accomplish this, they are highlighting several key initiatives. One of these initiatives is somewhat vague, advising banks to “enhance monitoring of illicit transfers to crypto-asset exchange service providers.”
The alternative measure could potentially cause significant disruption to the P2P market. The regulatory authority proposes: “Stopping transfers to crypto-asset exchange service providers if the sender’s name is different from the account name.”
In the Japanese rendition of the press release, the verb “reject” is utilized, clarifying that the suspension of such transfers should encompass both individual and corporate accounts.
As individuals familiar with P2P platforms are aware, the operational process of these transactions typically involves different names for the sender and receiver on both the fiat and crypto sides. Therefore, if Japanese banks were to decline any transactions from one person’s bank account to another’s crypto wallet, it could pose a significant threat to the P2P market.
It’s important to highlight that the present FSA request is framed as a suggestion rather than a directive mandating adherence to a particular criteria. Instead, it alludes to proposed measures. The response of banks to these suggestions and the potential impact on the P2P market are uncertain at this point.
In December 2023, the Japanese government introduced new tax reforms aimed at exempting companies from taxes on “unrealized gains” resulting from cryptocurrency holdings. However, for the bill to become law, it must still receive approval from both chambers of the Japanese parliament, namely the House of Representatives and the House of Councilors.
