Japan’s primary financial regulator, the Financial Services Agency (FSA), has recommended several safeguards to prevent “illicit transfers” to cryptocurrency exchanges. One of which is controlling the peer-to-peer (P2P) transaction market.
The FSA issued a request to Japanese institutions on February 14. The regulator reports that the country’s fraudulent transactions continue to be prevalent, mostly involving crypto assets.
Therefore, to “enhance the protection of their customers,” the FSA and the National Police Agency (NCA) advise banks to “go the extra mile.” To accomplish this, the FSA and NCA cite several significant “initiatives.”
One of them prescribes that banks “intensify monitoring of unauthorized transfers to crypto-asset exchange service providers” without divulging much information.
The alternative may cause substantial upheavals in the peer-to-peer market. The regulators recommend:
“Stopping transfers to crypto-asset exchange service providers if the sender’s name is different from the account name.”
By employing the verb “reject,” the Japanese translation of the press release explains that corporate and individual accounts should be subject to suspending such transfers.
The mechanics of such transactions dictate that the names of the sender and receiver on the fiat and cryptocurrency ends of the transaction are always distinct, as users of P2P platforms are aware.
Therefore, the P2P market could be severely jeopardized if Japanese institutions reject any transactions from one Bitcoin wallet of an individual to another.
Acknowledging that the present FSA request adopts a recommendation tone, as it “refers to initiatives” rather than requiring compliance with specific requirements, is essential.
Uncertainty surrounds the banks’ precise response to these suggestions and whether or not they will disrupt the P2P market. Regarding additional clarification, Cointelegraph contacted the FSA.
The Japanese government introduced a tax reform in December 2023 that exempts corporations from paying taxes on “unrealized gains” from cryptocurrency holdings. Nonetheless, the House of Representatives and the House of Councilors, both chambers of the Japanese parliament, must still ratify the measure.
