Japan Cracks Down on Crypto Exchange Scams with New Reporting Rules

Japan's Financial Services Agency (FSA) has introduced new rules for cryptocurrency exchanges to report cyberattacks and handle suspicious withdrawals. The regulations, announced on August 6, include a single form format for exchanges to escalate breaches to the proper channels. This is part of Japan's efforts to slow down the movement of stolen funds.

The FSA has also asked exchanges to implement measures such as multi-factor authentication and matching names on incoming bank transfers when phishing or impersonation attempts are suspected. Additionally, exchanges will need to set withdrawal limits based on customers' holdings and risk profiles.

Japan is trying to tackle the issue of growing losses among crypto exchange users and cases where funds obtained through fraudulent schemes are being transferred to exchange accounts. According to the FSA, once funds are off-ramped from exchanges and parked in wallets outside Japanese jurisdiction, the chances of a recovery are near zero.