The Financial Services Agency (FSA) -Japan ‘s main financial regulator-has clarified its stance on peer-to-peer (P2P) cryptocurrency transactions following recent recommendations to local banks.
In its Feb. 14 letter, the FSA encouraged banks to “further strengthen user protection” by “stopping transfers to cryptocurrency exchange providers if the sender name differs from the account name.” As Cointelegraph reported, this could affect P2P transactions in the country, as they typically involve two different users on both sides – the sender and the receiver.
Responding to Cointelegraph’s inquiry, the FSA clarified that its recommendation does not cover “any transactions between one individual and another.”
“We issued this request to ask banks and other financial institutions to strengthen measures against illegal money transfers in cases where an individual deposits cash from his or her own bank account into the account of a cryptocurrency exchange provider.”
Scammer X needs victim Y to send him a deposit from her bank account to the scammer’s newly created cryptocurrency account. Since the cryptocurrency platform usually does not accept the first deposit from one account from another person, the scammer persuades victim Y to change his name to X, which will make it easier for the platform to accept the deposit. However, at this stage, according to the new recommendations, the bank will block a suspicious transaction in which the sender asks to change his name from Y to X in order to make a deposit to the cryptocurrency platform.
According to the Financial Services Agency (FSA) , these measures have already been taken by a number of financial institutions, but the agency has not received any reports of specific cases that raise “concerns about crypto asset markets.”
The FSA ‘s recommendations “are not uniformly required” for all financial institutions. Banks are expected to consider and take specific measures depending on their circumstances.
Japan‘s neighbor, South Korea, is also taking active steps to combat cryptocurrency fraud. The Financial Intelligence Unit will introduce a preemptive trading suspension system for suspicious transactions on already operating platforms in the country. The system aims to freeze transactions even during the pre-investigation phase.
