Japan's FSA Clarifies Stance on Peer-to-Peer Crypto Transactions, Aims to Curb Fraud
Summary:
Japan's primary financial regulator, the Financial Services Agency (FSA), has further elucidated its stance on crypto asset-based peer-to-peer transactions. In response to potential confusion, the FSA clarified it doesn't aim to prevent transactions between individuals but rather to curb illegitimate transactions where an individual deposits money into a crypto-asset service provider's account. These measures have already been adopted by several financial institutions, and FSA's recommendations aren't uniformly obligatory for all. Interestingly, South Korea is also taking significant strides to tackle crypto-related fraud.
Through its latest suggestions to domestic banks, Japan's chief financial watchdog, the Financial Services Agency (FSA), has provided greater detail on its stance towards crypto transactions conducted on a peer-to-peer (P2P) basis. The FSA, in a communique on February 14, urged banks to bolster user protection measures even further by halting transfers to crypto-asset trading service platforms whose account names differ from the sender's name. As pointed out by Cointelegraph, this could potentially impact P2P transfers in Japan as typically the sender and receiver names are different. When Cointelegraph reached out for comments, the FSA explained that it didn't anticipate the prevention of transactions between different individuals, adding that the main goal of the recommendations was to implore banks and financial institutions to enhance measures against unauthorized monetary exchanges. The agency gave an example where an individual sends money from their personal bank account to a crypto-asset trading service provider's account.
Keeping this in mind, if a fraudulent party (X) is trying to convince a victim (Y) to transfer money from their bank account to a recently created crypto account, the crypto platform might not accept the initial deposit if it's from another person. Subsequently, the fraudster could convince the victim to alter their name to X so that the platform approves the transaction. In such a scenario, the new guidelines recommend that the bank should hinder the suspicious transaction wherein the sender wants to alter their name from Y to X for the purpose of depositing funds on the crypto platform.
Relations with Japan's GameFi community are raising liquidity concerns with the politician. According to the FSA, numerous financial institutions have already implemented these measures. However, no tangible reports causing anxiety over crypto-asset markets have reached the agency yet. The recommendations issued by the FSA are not uniformly required across all financial institutions. Banks are advised to consider and determine appropriate actions based on their unique situations.
Acting preemptively against crypto money laundering, Japan's neighboring country, South Korea, is taking proactive measures as well. The country's Financial Intelligence Unit (FIU) intends to roll out a preliminary trading suspension system for dubious transactions on already existing platforms domestically, allowing them to halt transactions even in the pre-investigation phase. In an unrelated matter, Vance Spencer, a die-hard supporter of cryptocurrencies, shared his thoughts with a magazine, stating that the arrival of cryptocurrencies in our lives is both unavoidable and irreversible.
Published At
2/21/2024 12:50:14 PM
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