Japan to Toughen Cryptocurrency Regulations to Bar Moscow-Bound Transactions

As worries that Russia and its elites may use cryptocurrency to evade international sanctions, Japan has announced that it would employ stricter regulations on cryptocurrency exchanges to prevent such evasions. Japanese trading platforms now have to identify and report transactions relating to sanctions-tied entities or individuals.

Government sources told Japan Today reporters that the new regulations would be introduced through amendments to the nation’s foreign exchange and trade law. The amendment will also prevent individuals and entities under sanctions from transferring crypto assets to third-party accounts.

Russia has come under drastic sanctions from several global powers, which has seen the nation lose access to the global financial market and its reserve in foreign currencies and gold.

Reports have shown that Russian officials are getting desperate and are considering turning to cryptocurrency, as they recently hinted at accepting Bitcoin for their energy exports. Also, many have called for the legalization of cryptocurrency in Moscow as lawmakers and crypto experts draft a comprehensive cryptocurrency regulatory framework.

A few weeks ago, the Japanese government instructed crypto trading platforms to increase surveillance of transactions and required them to report suspected sanctions-breaching transactions to financial authorities. Meanwhile, the Financial Services Agency (FSA) and the Japan Virtual and Crypto Assets Exchange Association have been working on ways to prevent Russia from bypassing sanctions while shelving the option of blocking all Russian users.

Japan to Introduce Banking Industry Regulations to Cryptocurrency Industry

Current Japanese law mandates that banks ensure that recipients of cash transfers are not sanction-tied individuals or entities. However, cryptocurrency exchanges have no such law guiding them. As such, the Prime Minister of Japan, Fumio Kishida, announced on Monday that his government would introduce necessary amendments to this loophole in the current parliamentary session.

The crypto industry has recorded varying reactions to the ongoing conflict between Russia and Ukraine. For instance, while all South Korean exchanges have restricted access to Russian users, top crypto platforms like Binance and Kraken have refused to take similar steps, calling it unnecessary.