Japan’s authorities are planning to tighten the rules on crypto operators to stop Russia using cryptocurrency to avoid sanctions. After Tokyo requested that digital asset exchanges improve transaction monitoring, the legislative initiative was taken.
Government of Japan will close loopholes in Crypto Space for Russians
Japan is going to tighten regulation for cryptocurrency exchanges amid concerns about Russia’s elites using cryptocurrencies to bypass international sanctions. The platforms will be required to verify if recipients of transactions are subject to financial sanctions imposed in response to Moscow’s decision to invade Ukraine.
To obligation will be introduced through amendments to the country’s foreign exchange and trade law, according to government sources quoted by Japan Today. According to the publication, this revision will also prevent sanctioned entities and individuals from transferring crypto assets to third-party accounts.
Russia faces unprecedented sanctions that limit its access to global financial markets and reduce its foreign currency and gold reserves. Russian officials appear to be interested in cryptocurrency, and may even accept Bitcoin for energy exports. Moscow is expressing support for legalizing cryptocurrencies, while experts and lawmakers are working together to create a complete regulatory framework.
In March, Japan asked cryptocurrency trading platforms for increased monitoring. It also requested them to notify financial authorities of suspicious transactions. Both the Japan Virtual and Crypto Assets Exchange Association (FSA), and the Financial Services Agency of Russia (FSA), are reportedly trying to find ways that Russian entities can avoid sanctions. However, they have not blocked all Russian users.
Japanese law currently requires that banks check whether the recipients of money transfer are under any restrictions. However, cryptocurrency exchanges do not have to comply with this requirement. Japan’s Prime Minister Fumio Kishida announced on Monday that the government will prepare to introduce the respective amendments during the current parliamentary session.
Different members of the cryptocurrency industry have reacted differently to the conflict. For example, while South Korean exchanges restricted Russians’ access, major global platforms like Binance and Kraken denied a request by the Ukrainian government to unilaterally freeze the accounts of all Russian users.
What do you think? Will the new regulations allow Tokyo to stop Russian entities or persons from getting around sanctions via Japanese crypto platforms. Comment below.
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