Japan Enhances Crypto Regulations to Combat Fraud and Protect Users

Japan’s leading financial watchdog has put forward suggestions to safeguard consumers against illegal fund transfers to digital currency platforms.

The Financial Services Agency (FSA) highlights the persistent high frequency of scam transactions within the nation, predominantly involving digital assets. The FSA proposes a variety of strategies aimed at shielding consumers from unauthorized transactions. Specifically, these strategies are expected to significantly disrupt the peer-to-peer (P2P) trading landscape.

Accordingly, the FSA, alongside the National Policing Agency (NPA), urges financial institutions to “enhance their customer protection measures.” To attain this objective, the FSA and NPA are advocating for a series of critical actions. Among these is a directive for banks to step up surveillance on suspect transfers to services dealing in cryptocurrency exchanges.

The document, in its Japanese form, uses the term ‘to reject’, clarifying that such a freeze on transfers should cover both personal and business accounts.
P2P platform users are aware that the transaction mechanics necessitate differing names for the sender and recipient at the fiat and digital currency transaction points. Thus, if Japanese banks were to block transfers from an individual’s bank account to another’s digital wallet, it could significantly impact the P2P trading sector.

Japan is recognized for its meticulous regulation of digital assets, ensuring rigorous adherence to a continuously evolving regulatory environment. A notable recent development is the tax reform set for 2024. Starting April 1, 2024, Japanese firms will be exempt from paying taxes on “unrealized gains” from cryptocurrency holdings.

Prior to this, in June 2023, local regulations were amended to relieve token issuers from a 30% tax on unrealized earnings from issued and retained coins.

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