Crypto Exchanges Urged To Add New Withdrawal Restrictions To Combat Rising Fraud

Authorities are asking crypto exchanges to add new withdrawal restrictions to combat rising fraud.

Japan’s Financial Services Agency and the National Police Agency are jointly urging the Japan Cryptocurrency Exchange Association to strengthen safeguards against fraud involving cryptocurrencies.

The request comes amid increasing complexity of criminal methods, expanding damage to exchange customers, and cases in which funds from special frauds are transferred into cryptocurrency exchange accounts.

The agencies direct the association to require its members to impose restrictions on cryptocurrency withdrawals for a certain period after customers deposit fiat currency or purchase crypto assets.

Exchanges must also introduce a pre-registration system for withdrawal destinations, with further restrictions on withdrawals for a set period after registration, and set appropriate withdrawal limits.

Additional measures include stronger checks to prevent irregularities at account opening, clear confirmations and warnings to customers, intensifying transaction and access-environment monitoring, and faster action on customer confirmations, transaction restrictions, and account freezes when suspicious activity is detected.

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