Japan's Financial Services Agency mandates crypto withdrawal limits to curb fraud

Japan's Financial Services Agency (FSA) and the National Police Agency have issued a joint request to all domestic cryptocurrency exchange operators to strengthen anti‑fraud measures. The request outlines eleven actions, the most prominent being a temporary restriction on withdrawing fiat after a deposit or crypto after a purchase for an unspecified period. Exchanges must also pre‑register withdrawal destinations and, where a risk is identified, block transfers, as well as set withdrawal caps based on customer risk profiles, asset holdings and transaction history.

The measures aim to slow the rapid movement of funds used in the surge of SNS‑based investment and romance scams, which the agencies say have risen sharply, with thousands of cases and billions of yen in losses. Additional requirements include enhanced transaction monitoring, multi‑factor authentication for critical operations, verification of sender‑receiver name matches, and faster information sharing with prefectural police. The FSA has recently created a dedicated crypto‑asset and stablecoin division to oversee these new supervisory standards.