Japan FSA Requests Crypto Exchanges Add Withdrawal Delays to Fight Scams

TLDR

• Japan’s Financial Services Agency asked crypto exchanges to add withdrawal delays to fight scams
• The request was made jointly with Japan’s National Police Agency
• Exchanges are asked to require pre-registered withdrawal addresses with a waiting period
• Other proposed steps include customer-specific withdrawal limits and phishing-resistant login security
• The measures are not mandatory, and exchanges will decide how to apply them

Japan’s financial regulator has asked crypto exchanges to add new safeguards against scams. The request focuses on withdrawal delays and stronger identity checks.

The Financial Services Agency made the announcement on Thursday. It worked with Japan’s National Police Agency on the request.

Officials pointed to a rise in losses linked to crypto exchange accounts. They said some funds from fraud schemes are being moved through these accounts.

The FSA sent its request to the Japan Virtual and Crypto Assets Exchange Association. This group is the industry’s self-regulatory body.

Withdrawal Delays and Address Registration

One of the main requests calls for a waiting period on crypto withdrawals. This would apply after a customer deposits fiat currency or buys digital assets.

Exchanges are also asked to require users to register withdrawal addresses in advance. A new address would need a waiting period before it can be used for a transfer.

These steps are meant to slow down scammers who trick victims into sending funds. The delay gives time to catch suspicious transfers before they leave the platform.

The FSA also wants exchanges to set withdrawal limits based on each customer. This would replace a one-size-fits-all cap with limits tailored to account activity.

More Security Checks on the Way

The regulator asked for stronger monitoring of transactions and login activity. Exchanges would need to watch for unusual patterns tied to fraud.

The request also covers multifactor authentication that resists phishing attempts. This type of login security is harder for scammers to bypass than standard codes.

Another proposed check would confirm that a bank remitter’s name matches the name on the crypto account. This step aims to catch mismatched transfers linked to fraud.

Officials said these steps target a wider pattern of losses tied to crypto scams. Fraudulent schemes have increasingly funneled stolen money through exchange accounts.

The FSA has not made these measures mandatory. It said each exchange should decide how to apply them based on its own operations and services.

Individual platforms will need to weigh their exposure to misuse when deciding what to adopt. Some exchanges may choose to implement all of the requests.

Others may adopt only parts of the plan depending on their risk level. The FSA left the specific implementation up to the exchanges themselves.

The joint effort with the National Police Agency shows fraud enforcement in Japan spans multiple agencies. Both bodies worked together on the request sent this week.

As of Thursday, exchanges had not issued public responses to the request. The FSA said it would continue watching how platforms respond to the proposed safeguards.

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