Japan's FSA introduces new crypto anti-fraud and regulatory measures

Japan’s Financial Services Agency (FSA) is advancing new regulatory measures to combat cryptocurrency scams and improve cyberattack reporting. In a directive issued alongside the National Police Agency, regulators proposed 11 anti-fraud steps for members of the Japan Virtual and Crypto Assets Exchange Association (JVCEA).

Key recommendations include implementing cooldown periods for withdrawals to newly added addresses, requiring funds to sit in flagged accounts for a set duration, and setting withdrawal limits based on customer risk profiles. The measures aim to prevent criminals from quickly moving stolen funds out of Japanese jurisdiction. Additionally, the FSA is working to standardize reporting formats for cyber breaches across multiple sectors.

Separately, the FSA’s Financial System Council is expected to discuss legislative amendments later this month. These discussions may accelerate a regulatory overhaul that could reclassify certain digital assets from payment tools under the Payment Services Act to investment products under the Financial Instruments and Exchange Act, treating them more similarly to stocks or bonds.