Japan’s Financial Services Agency has asked crypto exchanges to introduce withdrawal delays and tighter account protections as authorities respond to a rise in fraud involving digital assets. The request was made jointly with the National Police Agency and comes amid growing losses among exchange users, according to the regulator.
The agencies said they are seeing cases in which money obtained through fraudulent schemes is moved into crypto exchange accounts. In response, they have asked platforms to adopt a set of measures aimed at slowing suspicious transfers and making unauthorized withdrawals harder to carry out.
Withdrawal delays and address checks
A central part of the request is a delay on crypto withdrawals for a set period after a customer deposits fiat currency or buys digital assets. The idea is to create a buffer before newly funded accounts can move assets out.
Authorities also asked exchanges to require users to pre-register withdrawal addresses. If a customer adds a new destination address, the platform should impose another waiting period before transfers to that address are allowed.
Broader safeguards requested
The FSA said exchanges were also asked to set withdrawal limits tailored to individual customers rather than relying only on uniform controls. The request includes stronger monitoring of transactions and of the environments from which users access their accounts.
In addition, the agencies called for phishing-resistant multifactor authentication and for checks confirming that the name of a bank remitter matches the name of the holder of the crypto account receiving the funds.
Request sent through industry body
The request was submitted to the Japan Virtual and Crypto Assets Exchange Association, the country’s self-regulatory body for crypto exchanges. That places the industry group at the center of relaying and shaping how the measures may be adopted by member platforms.
The regulator framed the move as a response to increasingly sophisticated scams, rather than as a change to formal rules. The focus is on reducing the misuse of exchange accounts when fraud proceeds are funneled into digital asset platforms.
Not a binding rule
The proposed measures are not mandatory requirements. The FSA said each exchange should decide how to put them into practice based on its own operations, services and degree of exposure to potential misuse.
That means platforms may not implement the safeguards in exactly the same way, even if the overall direction from authorities is clear. The next confirmed step is for exchanges and the industry association to consider how, and to what extent, the requested controls can be applied.
Source: cointelegraph.com