Japan's FSA Proposes Financial Measures That Could Disrupt P2P Crypto Transactions
Summary:
Japan's Financial Services Agency (FSA), in collaboration with the National Police Agency, issued an advisory to banks to enhance protection against unauthorized transfers to cryptocurrency exchanges. One proposal, which could affect the peer-to-peer (P2P) market, is halting transfers to crypto service providers if the sender's name doesn't match the account name. While it's currently just a recommendation, its implementation could potentially disrupt the P2P market. Furthermore, new tax reforms, which could exempt companies from taxes on unseen crypto gains, are pending approval in the Japanese parliament.
Japan's main finance watchdog, the Financial Services Agency (FSA), has proffered several strategies to safeguard customers from unauthorized money transfers into cryptocurrency exchanges, which could potentially impact the peer-to-peer (P2P) transaction marketplace. The FSA issued an advisory to Japanese banking establishments on February 14, pointing out that the rate of fraudulent activities in the country is still alarmingly high, with a large proportion connected to digital currencies.
The FSA, in cooperation with the National Police Agency (NPA), is recommending banks enhance their customer protection. A series of methods have been proposed to achieve this. One of these methods instructs banks to amplify their scrutiny of illegal transfers to cryptocurrency related services. Another suggestion, which could significantly disrupt the P2P market, is to halt transfers to crypto service providers if the sender's name does not match the account name.
The exact referential language used in the Japanese version of the announcement is 'reject', and it clarifies that the halt on transfers should include both personal and corporate accounts. P2P transactions functionality rests on the fundamental aspect that the names of individuals involved at the fiat and crypto ends of the transaction are always mismatched. As a result, if Japanese banks implement a policy of rejecting transactions transferring from an individual's bank account to another's digital coin wallet, this could potentially jeopardize the P2P market.
Though the FSA's current guidance is written in suggestion terms rather than mandatory directives, how banks will respond to these proposals and the possible impacts on the P2P market is yet to be determined. FSA has been contacted by Cointelegraph for an elaborated comment.
Moreover, Japan’s government announced a new tax reform in December 2023, aiming to exempt companies from being taxed on 'unrealized gains' from digital currency holdings. The bill is still awaiting validation by both the House of Representatives and the House of Councilors in the Japanese Parliament.
Published At
2/14/2024 12:32:36 PM
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