[DigitalToday reporter Jae-won Choi (최재원)] Japan's Financial Services Agency has expressed concern that cryptocurrency businesses could steer users to the more profitable dealer model. It aims to check whether trading screen designs and guidance methods encourage choices that are disadvantageous to customers.

CoinPost reported on Sept. 17 that the agency said in materials released that day it discussed the issue during an opinion-exchange meeting with the Japan Virtual and Crypto Assets Exchange Association on July 15. The Financial System Council has also previously pointed to a potential conflict of interest, citing that dealer trading brings higher profits to operators.

In the dealer model, an operator directly becomes the counterparty to the customer's trade and presents the price. In the exchange model, the platform matches orders between users. The two models differ in price formation and trading costs, making it important for users to understand the difference and choose accordingly.

Based on a legal duty to perform operations faithfully and fairly with customers' best interests in mind, the agency plans to continue discussions with operators about trading screens and user flows. It also asked that they review how to reflect a suitability principle in industry self-regulation, providing services tailored to customers' knowledge and experience. It is not, however, that any illegal act by a specific company has been confirmed or that it has decided to ban dealer operations.

Identity verification procedures will also be tightened. From April 1, 2027, when confirming a photo ID in face-to-face checks, operators must use an ID with an IC chip and read the chip's information. Cryptocurrency businesses are also subject to the rule and must prepare related systems.

It also called for responses in line with international anti-money laundering standards. After the Financial Action Task Force requested countermeasures against North Korea and Iran and called for enhanced customer due diligence for Myanmar, the agency urged the industry to thoroughly implement identity verification for transactions, suspicious transaction reporting and notification obligations related to cryptocurrency transfers.