Japan's Financial Services Agency (FSA) and the National Police Agency have sent a joint letter to the Japan Virtual Currency Exchange Association (JVCEA), demanding that crypto exchanges strengthen anti-fraud protections, ChainCatcher reported, citing CoinPost. The letter outlines 11 specific requirements, including pre-registration of withdrawal addresses, stronger transaction monitoring, and stricter identity checks at account opening. Exchanges would also be required to impose withdrawal limits for a set period after users deposit fiat or purchase crypto assets. The move comes as investment scams and “pig-butchering” fraud spread rapidly on social media, with criminals increasingly using crypto accounts to move illegal funds. The FSA suggests exchanges set withdrawal caps based on customer risk levels and transaction purposes, freeze or restrict accounts immediately upon detecting suspicious activity, and improve intelligence sharing with police. System upgrades that cannot be implemented quickly may be phased in. Separately, the FSA has formally established a “Crypto Assets and Stablecoins Division” to oversee related regulation.
Japan's Financial Services Agency and the National Police Agency have jointly written to the Japan Virtual Currency Exchange Association (JVCEA), directing exchanges to step up anti-fraud controls, according to CoinPost via ChainCatcher.
Eleven requirements for exchanges
The letter spells out 11 measures. Exchanges must require pre-registration of withdrawal addresses, tighten transaction monitoring, and verify identity documents rigorously when accounts are opened. Once a user deposits fiat currency or buys crypto assets, withdrawals must be blocked for a set holding period.
Fraud surge on social media
The push follows a sharp rise in investment scams and “pig-butchering” schemes on social media, with fraudsters routinely using crypto accounts to shift illicit funds. The FSA recommends that exchanges set withdrawal caps flexibly, based on a customer's risk level and transaction purpose. Suspicious activity should prompt an immediate freeze or restriction, and exchanges are urged to share intelligence with police more actively. Where system overhauls cannot be completed quickly, phased implementation is permitted.
In a related move, the FSA has officially set up a “Crypto Assets and Stablecoins Division” dedicated to regulating the sector.
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