The Financial Services Agency (FSA) of Japan has brought to light its stance on peer-to-peer (P2P) digital asset transfers. They have stated their intent to not ban such activities. This clarification is an outcome of the concerns raised by the public and the cryptocurrency community regarding the FSA’s latest policy recommendations to banks.
Link to FSA Clarification : Read it here ( In English )
Read it here ( In original Japenese)
The FSA’s Policy Recommendations
In its public request to financial institutions, the FSA has urged banks to enhance their measures against crypto-related crimes and protect investors. Among the many propositions made, a controversial suggestion that stood out was to “stop transfers to crypto-asset exchange service providers if the sender’s name is different from the account name.” This recommendation was considered a potential attack on P2P digital asset trading, where the sender’s name does not match the account name.
However, it’s crucial to note that these recommendations were not mandatory, rather these were some protective measures for the banks to consider. The banks still hold the power to make the final call as they see fit.
Clarification on P2P Transactions
In response to media inquiries, the FSA clarified that their recommendations did not target transactions between individuals. Instead, they were directed towards tracking the cases where individuals deposit cash from their bank accounts to virtual asset service provider (VASP) accounts. The intention was to strengthen measures against unlawful money transfers to crypto asset exchange service providers.
The FSA emphasized that its aim was not to limit P2P transactions but to ensure the prevention of illicit activities and protect investors. The focus was to set up a structure that ensures investor safety and safer trading practices. The agency expects banks to block suspicious transactions in which users request name changes to their accounts to send funds to digital asset-related accounts.
Banks’ Autonomy in Implementing Recommendations
Although the FSA made these recommendations, each bank has the discretion to decide whether to implement them or modify them according to their policies and risk management strategies. The FSA acknowledged that several banks have already implemented their recommendations but stated that no data has been provided to suggest a significant increase in crypto-related crimes that would warrant further concern.
Japan’s Stance on Digital Asset Activity
Japan has been known for its progressive approach to digital asset regulation while maintaining its position as a leader in Bitcoin adoption and innovation. The country has been opening up to increased digital asset activity and has recently proposed allowing venture capital firms to hold and acquire digital assets for investments in local startups. This move aims to catalyze investment in Web3 companies and foster growth in the digital asset ecosystem.
Conclusion
The FSA’s clarification regarding P2P digital asset transfers in Japan provides much-needed reassurance to the cryptocurrency community. While the agency has recommended banks to enhance measures against crypto-related crimes, it is clear that the intention is not to ban P2P transactions but rather to protect investors and prevent illicit activities. As Japan continues to navigate the evolving digital asset landscape, it remains committed to maintaining a balance between innovation and regulation.
Disclaimer: This article is for informational purposes only and should not be construed as financial or legal advice. Readers should do their research and consult with professionals before making any investment or legal decisions.
