Japan’s Financial Services Agency (FSA) and the National Police Agency (NPA) have recommended measures to encourage mainstream banks to enhance customer protection, especially with transactions involving cryptocurrencies.
In a press release published on February 14, 2024, the FSA emphasized the disturbingly high number of cases involving specialized fraud and noted the increasing instances of damage due to illegal fund transfers through Internet banking.
According to the release, the NPA’s analysis indicated that a significant portion of the damages occurred in transactions involving cryptocurrency assets. As a response, the agencies proposed measures aimed at curbing the illicit use of cryptocurrencies.
Among these measures, they suggested that banks should halt transactions with virtual asset exchange service providers when the names of the sender and recipient differ. Additionally, they recommended strengthening the monitoring of illegal transfers to digital asset exchange service providers.
Notably, the Japanese version of the announcement published earlier on February 7, 2024, included that banks should reject transfers, including those from personal and corporate accounts, where the account holders’ and clients’ names do not match. The release also mentioned that banks should inform customers of these changes through various channels.
Though the FSA’s recent recommendations are suggestions, not mandatory requirements, the banks’ response to these suggestions and their potential impact on the P2P market remains uncertain.
Given that peer-to-peer (P2P) transactions often involve parties with different names, the potential rejection of transfers from an individual’s bank account to another user’s crypto wallet by Japanese banks could significantly impact the P2P market.
Japan continues to try to maintain its status as a critical hub in the global crypto sector. The country’s Prime Minister reaffirmed the government’s full support for the Web3 industry in July 2023. However, in light of recent crypto-related thefts in the nation, the authorities are now considering the need for stricter regulations on crypto transactions.
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