Japan's FSA and National Police Agency Request Crypto Exchanges to Delay Withdrawals Amid Rising Scam Losses
Key Takeaways
- •Japan's FSA and National Police Agency jointly submitted a request urging crypto exchanges to implement withdrawal delays and additional safeguards against increasingly sophisticated scams.
- •Exchanges are asked to restrict withdrawals for a specified period after fiat deposits or crypto purchases and to require advance registration of withdrawal addresses with a waiting period before use.
- •Additional proposed measures include customer-specific withdrawal limits, phishing-resistant multifactor authentication, stronger transaction monitoring, and verification that bank remitter names match crypto account holders.
- •The recommendations are non-binding, allowing exchanges to determine their own implementation based on individual operations, services, and risk exposure.
- •The initiative aligns with similar regulatory efforts across Asian markets where authorities are pressing exchanges to tighten transaction controls in response to surging fraud losses.
Japan's Financial Services Agency (FSA) has called on cryptocurrency exchanges to implement withdrawal delays and additional safeguards as authorities intensify efforts to combat increasingly sophisticated scams involving digital assets.
The FSA said it submitted the request jointly with the National Police Agency, citing growing financial losses among crypto exchange users and an increasing number of cases in which fraudulently obtained funds are being transferred to exchange accounts. The request underscores how social media–driven investment scams and romance frauds have increasingly exploited crypto rails as a quick conduit for illicit proceeds, a pattern documented by financial regulators across multiple jurisdictions.
Under the request, exchanges should restrict cryptocurrency withdrawals for a specified period after customers deposit fiat currency or purchase digital assets. Platforms have also been asked to require customers to register withdrawal addresses in advance and to introduce a waiting period before newly registered addresses can be used.
The request was submitted to the Japan Virtual and Crypto Assets Exchange Association, the country's self-regulatory body for cryptocurrency exchanges. The JVCEA operates within Japan's licensing framework for crypto exchanges, which was established under amended Payment Services Act provisions that took effect in 2017, making Japan one of the first major economies to require formal registration of crypto trading platforms.
In addition to withdrawal delays, the FSA and police proposed the following measures:
- Customer-specific withdrawal limits
- Stronger monitoring of transactions and account access environments
- Phishing-resistant multifactor authentication
- Checks to confirm that the name of a bank remitter matches the holder of the corresponding crypto account
The proposed measures are not binding regulations. The FSA said exchanges should determine how to implement the safeguards based on their individual operations, services, and exposure to potential misuse.
The move comes as Japanese authorities increase scrutiny of cryptocurrency platforms and seek to prevent exchange accounts from being used to receive or move funds obtained through fraud. The measures reflect a broader policy shift toward introducing additional friction on cryptocurrency withdrawals—particularly immediately after funds enter an exchange—giving both customers and platforms more time to detect suspicious activity. The approach aligns with similar initiatives in other Asian markets, where regulators have pressed exchanges to tighten transaction controls in response to surging fraud losses.