Japan’s Financial Services Agency and National Police Agency have jointly issued an 11-point anti-fraud plan for crypto exchanges, aiming to curb rising losses from online scams. The directive, submitted through the Japan Virtual and Crypto Assets Exchange Association, calls for a series of measures that deliberately slow down certain transactions—an uncommon approach in the fast-moving crypto space—to disrupt fraud before stolen funds can be moved.
The plan focuses on withdrawal controls, asking exchanges to consider holding periods or cooling-off delays after fiat deposits or cryptocurrency purchases. Customers may also be required to register destination wallet addresses in advance, with waiting periods applied to newly added addresses. Risk-based withdrawal limits tailored to customer activity and transaction details are another proposed safeguard. By treating sudden changes in withdrawal behavior as potential red flags, authorities hope to give platforms more time to identify suspicious movements.
Beyond withdrawal rules, the FSA and NPA are pushing for stronger transaction monitoring and faster information sharing with local police. Exchanges are expected to enhance systems that detect activity linked to fraud, including comparing the name of a bank remitter with the crypto account holder. Other recommendations include deploying phishing-resistant multifactor authentication and introducing customer-specific transfer limits.
The directive is a response to alarming statistics: Japan recorded 19,038 fraud cases in 2023 with losses of ¥45.26 billion, and suspicious transaction reports involving crypto assets reached 19,344 cases. About ¥8.73 billion in stolen funds were reportedly transferred into crypto exchange accounts. The measures target online investment scams, social media fraud, and romance-based schemes such as “pig-butchering.”
Importantly, the guidance is not a binding law but a set of requests. Each of Japan’s 27–30 registered Crypto-Asset Exchange Service Providers can decide how to implement the measures based on its operations, services, and risk exposure. This flexibility creates a balance between regulatory pressure and platform discretion, but the message is clear: adding friction to withdrawals may be a necessary defense against fraud. The move adds to Japan’s existing crypto oversight framework, which evolved after major incidents at Mt. Gox and Coincheck and now includes a dedicated Crypto Assets and Stablecoins Division within the FSA.
