Japan's Financial Services Agency and police department join forces to combat crypto crime! Strengthening efforts to crack down on fraud and money laundering, with a greater focus on law enforcement.

The Financial Services Agency (FSA) of Japan recently announced that it is urging domestic financial institutions to enhance monitoring of "illicit transfers" involving cryptocurrency exchanges. This move comes in response to a report by the Japanese National Police Agency, which indicates a significant amount of financial fraud losses are linked to illicit cryptocurrency transactions.

The Japanese government is clear: it is time to tighten control over the flow of digital currencies to ensure user protection is not just a policy, but a practice.

Japan Starts Cracking Down on Cryptocurrency Crimes

Strict Scrutiny on Crypto Transfers' Identities

The FSA not only issued warnings but also laid out an action plan. One of the measures is urging financial institutions to halt transfers where the sender's name does not match the account name. This move aims to prevent identity theft and money laundering, potentially impacting peer-to-peer transfers and legitimate transactions where funds are sent from a bank account holder to another individual's cryptocurrency trading account.

Strengthening monitoring of suspicious transfers to cryptocurrency exchanges is a double-edged sword. While it underscores the FSA's determination to combat financial crimes related to cryptocurrencies, it raises concerns about balancing security with the smooth operation of digital finances. Although FSA's stance may not be warmly welcomed by all crypto enthusiasts, it reflects a common trend among governments worldwide, prioritizing crackdowns on fraudsters and criminal activities over encouraging cryptocurrency innovations.

A Lifeline for Cryptocurrency Companies

Despite the FSA's strict stance on individual transactions, the Japanese government has not tightened its policies on the crypto industry, as evidenced by the crypto-friendly tax regime approved for 2024. Under the new policy, companies holding cryptocurrencies long-term will be exempt from paying taxes on unrealized gains. This move is seen as an acceptance of digital assets as a stable investment, provided they are managed responsibly and transparently.

Listen to the industry's voice! Japan revises 2024 tax reform outline: Cryptocurrency "unrealized gains" exempt from taxation