March 27, 2024
Policy & Regulation

Japan’s Financial Regulator Proposes Measures Impacting Crypto Transactions

Japan’s Financial Services Agency (FSA) has issued a series of proposed measures that could have significant ramifications for the peer-to-peer (P2P) transactions market. In a formal request to Japanese banks on Wednesday, the FSA expressed concern over the increasing number of fraudulent transactions in the country linked to crypto assets.

In collaboration with the National Police Agency (NPA), the FSA urged banks to enhance user protection through various initiatives. One of the recommended measures encourages banks to “strengthen monitoring of unlawful transfers to crypto-asset exchange service providers.” While lacking explicit details, it emphasizes the need for increased vigilance in detecting and preventing fraudulent transfers.

However, the second proposed measure has raised eyebrows within the P2P market. The FSA suggests halting transfers to crypto-asset exchange service providers if the sender’s name differs from the account name. The press release specifies that this suspension would apply to both individual and corporate accounts. This recommendation has sparked concerns among P2P platform users, given the common practice of different names on fiat and crypto ends.

It’s crucial to note that the FSA’s request is presented as a recommendation rather than a mandatory requirement. The intention is to encourage initiatives rather than impose specific obligations, leaving uncertainty about how banks will respond and the potential impact on the P2P market.

In a related move, the National Tax Agency revealed last year that it had revised laws to exempt crypto token issuers from 30% corporate taxes on unrealized gains, effective from June 20. Prime Minister Fumio Kishida stated that the goal was to boost the blockchain and crypto sectors, aligning with a push for “new capitalism.” Crypto investors will still face a maximum of 55% income tax on earnings over JPY200,000 ($1,797) related to cryptocurrency, classified as “miscellaneous income.”

However, the approval of this bill depends on the decision of both chambers of the Japanese parliament. More recently, the FSA proposed an amendment to the Financial Instruments and Exchange Act to provide clarity on the legal nature, operational rules, member responsibilities, ownership, and tax relationships of DAOs. The amendment aims to ease regulations on employee rights in tokenized limited liability companies and streamline the operations of DAOs.

Image by pch.vector on Freepik

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