Japan Regulators Crack Down on Crypto Scams with Waiting Periods and Identity Checks

Japan's Financial Services Agency (FSA) has requested cryptocurrency exchanges to introduce mandatory waiting periods on withdrawals and strengthen identity checks, as part of an escalating crackdown on scams that have drained over $1.04 billion from victims through May this year.

The FSA, jointly with the National Police Agency, made the request on August 6 and announced it on Thursday. The guidance targets a pattern of fraud in which stolen funds are rapidly funneled through exchange accounts before authorities can intervene.

Exchanges are being asked to impose waiting periods on crypto withdrawals after customers deposit fiat currency or purchase digital assets. Each platform will assess its own exposure to misuse and decide which measures to adopt, with some already implementing similar restrictions.

The FSA's recommendations extend beyond withdrawal timing, including enhanced monitoring of transaction flows and login activity, as well as the implementation of phishing-resistant multifactor authentication for higher-risk activity.