Japan To Tighten Crypto Exchange Regulation to Enforce Sanctions

Japan intends on tightening regulations around cryptocurrency exchange to prevent sanctioned countries from taking evasive actions using digital assets.

Hirokazu Matsuno, the Chief Cabinet Secretary, said in a press conference on Monday that the Japanese government plans to make an amendment to its Foreign Exchange and Foreign Trade Act. The aim of this amendment is to bring cryptocurrency exchanges under the scope of laws that govern banks.

Under the revised foreign exchange laws, cryptocurrency exchanges, similar to banks, will be required to verify and flag any transactions associated with sanctioned Russian individuals or groups.

The newly elected prime minister of Japan, Fumio Kishida, also supported the proposed revision and called on Western allies to perform coordinated moves to enforce the new laws.

This of course follows the various global financial sanctions imposed on Russia after its actions in Ukraine.

Earlier this month, the financial regulatory body in Japan asked cryptocurrency exchanges to refrain from allowing transactions for sanctioned individuals and groups of people.

However, this proposed amendment to the law will make it a legal compulsion for cryptocurrency exchanges to block transactions performed by various sanctioned Russian oligarchs, officials, banks and other institutions.

The financial sanctions imposed on Russia have left it no choice but to seek alternative payment systems and methods to access the international trade market.

There has been a growing concern that Russia is using cryptocurrency to evade all of the sanctions imposed on it because of the country’s growing interest in the cryptocurrency market and recent comments made by Russian ministers.