Japan’s Financial Services Agency (FSA) has moved recently to address concerns related to peer-to-peer (P2P) transactions while in a separate development, the country’s GameFi community is calling for regulatory change to enable greater liquidity.The two distinct developments both relate to getting the balance right in terms of crypto regulation from the perspectives of regulators and lawmakers and crypto sector entrepreneurs and participants.<h2 id="header-0">Addressing concerns</h2>It <a href="https://coinnesslive.page.link/PoGrie3zCsDkDAi6A" rel="noopener noreferrer nofollow">emerged</a> last week that the FSA had proposed a number of measures to safeguard users against “unlawful transactions,” causing alarm that any such moves would inhibit the P2P transactions market.Responding to a <a href="https://cointelegraph.com/news/japan-regulator-clarifies-stance" rel="noopener noreferrer nofollow">query</a> from Cointelegraph, the FSA elaborated that its recommendation does not encompass &#34;transactions from one individual to another.&#34; Instead, it aims to bolster measures against illicit money transfers, particularly instances where an individual deposits cash from their bank account into an account belonging to a crypto asset exchange service provider.The regulator clarified that under the new recommendations, banks would intercept suspicious transactions where the sender seeks to alter their name for the purpose of depositing funds into the crypto platform. The FSA outlined that this situation arises where a fraudster convinces an innocent exchange user to effect the name change, so that exchange rules can be circumvented and the fraudster can receive funds from the scam victim.According to the FSA, numerous financial institutions have already implemented these measures, although the agency has not received any reports of specific cases raising concerns regarding crypto asset markets. Notably, the FSA emphasizes that its recommendations are not universally mandated for all financial institutions, with banks expected to devise and implement measures tailored to their specific circumstances.<h2 id="header-1">Solving crypto market liquidity issues</h2>With that clarification, it appears that the measures won’t have the negative impact on P2P crypto markets as many market participants originally feared.Meanwhile, in a distinct development, Japan&#39;s blockchain gaming community has approached the Liberal Democratic Party (LDP) to seek assistance in bolstering liquidity within Japan&#39;s crypto asset market.Taking to the X social media platform on Wednesday, Ryo Matsubara, director of Oasys, a GameFi blockchain, <a href="https://x.com/RyoMatsubara3/status/1760205558601445556?s&#61;20" rel="noopener noreferrer nofollow">outlined</a> that he had visited the LDP&#39;s digital society promotion headquarters on behalf of Japanese blockchain gaming projects to raise concerns about stringent regulations impeding liquidity in Japan, which directly impedes the growth of the GameFi ecosystem.Matsubara advocates for regulations that incentivize safe cryptocurrency investment, positing that increased liquidity, marked by a surge in buyers and sellers, could result from such measures. Oasys intends to continue collaborating with the government to enhance Japan&#39;s global competitiveness in the Web3 market, with Matsubara expressing confidence in Japan&#39;s potential to reclaim its illustrious gaming legacy on Web3.While Japan initially harbored skepticism toward crypto adoption, its stance has softened in recent times. Matsubara <a href="https://coinnesslive.page.link/x4GwP9RRFjadzH3f9" rel="noopener noreferrer nofollow">acknowledged</a> the positive impact of a recent crypto-related tax reform which was enacted in December.In September 2023, the Japanese government <a href="https://coinnesslive.page.link/Ryv39goErVTUa1nBA" rel="noopener noreferrer nofollow">commenced</a> planning to permit startups to raise public funds through crypto asset issuance. That bill was <a href="https://coinnesslive.page.link/aq8hcvt3HgFtEnMs5" rel="noopener noreferrer nofollow">approved</a> last week and now goes forward to the Japanese parliament for further deliberation.These recent developments demonstrate that Japan is navigating regulatory complexities as it seeks to balance innovation with consumer protection in the burgeoning crypto space.

Efforts continue in Japan to bring about optimized regulation

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