The Japanese government is planning to make stricter rulings on cryptocurrency exchanges, as the country announced plans to amend its Foreign Exchange and Foreign Trade Act. According to Hokazu Matsuno, the Chief Cabinet Secretary, Japan will introduce a bill to revise the existing laws on the matter.
The manoeuvre is intended to crack down on any loophole that allows sanctioned countries like Russia to evade sanctions through cryptos. The revision “presumably enables the government to apply the law to crypto-asset exchanges like banks and oblige them to scrutinize whether their clients are Russian sanction targets,” Saisuke Sakai, a Senior Economist at Mizuho Research and Technologies, told Reuters.
Japan is one of the countries that has deployed financial sanctions against Russia due to the invasion of Ukraine. In fact, the country issued an act early this month to ask almost 30 crypto exchanges to ban transactions from sanctioned countries.
Japan’s Financial Services Agency (FSA) and Ministry of Finance jointly announced that they have laid out a plan to penalize cryptocurrency exchanges that are violating economic sanctions imposed against Russia.
Cryptocurrency exchanges in the country are looking at up to three years of prison or a monetary fine of 1 million yen (almost $8,500) for facilitating unauthorized crypto transactions to sanctioned targets.
Further, crypto exchanges need to report to the FSA if they suspect any unauthorized cryptocurrency transfers involving the sanctioned entities or individuals.
Flagging Suspected Transactions
Now, with the proposed amendments, crypto exchanges in Japan will be required to conduct any verification on transactions and flag them when applied, only when an order is suspected of being associated with sanctioned people or businesses.
Due to the financial sanctions imposed on Russia, the country is being forced to seek out alternative payment systems and methods to access the international trade market.
