Japanese financial authorities and the police have now agreed to request crypto exchanges to hold customer withdrawals. Through a joint instruction, the Financial Services Agency (FSA) of Japan and the National Police Agency of Japan demand crypto platforms to implement a specific delay period, right after users deposit fiat money or buy digital assets. This policy temporarily locks coin movements before funds can be transferred to external wallets.
This move responds to reports of exchange user losses due to scam methods that exploit the speed of blockchain transfers. Perpetrators often manipulate victims to deposit money into exchange accounts, then immediately transfer it to external addresses far beyond the reach of law enforcement. This warning message was distributed by the government directly through the Japan Virtual and Crypto Assets Exchange Association (JVCEA), a self-regulatory organization managing the local crypto industry.
What Are the Requested Requirements?
The regulators’ demands include three new layers of prevention to secure the ecosystem. First, exchanges are requested to set a crypto withdrawal delay period for accounts that have recently received fiat deposits. Second, customers are required to pre-register withdrawal wallet addresses before submitting orders to move funds out.
Third, platforms are requested to restrict withdrawal permissions to new wallet addresses for a certain period of time. Beyond those initial three layers, the FSA also lists additional protections, which include setting maximum customer withdrawal limits. Exchanges are also encouraged to routinely monitor transaction access environments, install anti-phishing multi-factor authentication, and always match bank remittance names with the real names of the crypto account owners.
Non-Legally Binding Recommendations
The list of requirements outlines strict supervision, but all instructions from these regulators are purely non-binding recommendations. Exchanges are still granted the right to design the implementation of these new rules themselves. They are free to determine the depth of the intervention taken, taking into account their daily business models, featured services offered, and the level of user risk exposure on their respective platforms.
This situation contributes extra operational challenges for the Japanese market, which demands the tightest compliance in the industry. Recently, crypto exchange Bitget decided to stop operating in this jurisdiction and scheduled its effective closure by December 31, 2026. Meanwhile, for local operators choosing to continue operating, this delay recommendation forces them to choose between fully complying with security authorities or maintaining instant transaction experiences to preserve retail customer satisfaction.
Reported from Cointelegraph.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
