Japan Considers Stricter Crypto Regulations in Light of Russia Sanctions

Japan is going to tighten regulations regarding cryptocurrency exchanges amid concerns that Russia’s elites might use cryptocurrencies to bypass international sanctions. These platforms will have to verify that transactions recipients are not subject to financial sanctions.

According to Japan Today, the amendments to the country’s foreign exchange law and trade law will introduce this obligation. According to the publication, the revision will also prevent sanctioned entities and individuals from transferring crypto assets to third-party accounts.

Russia is now facing severe sanctions that limit its access to the global market for financial services and its gold and foreign currency reserves. According to reports, Russian officials are interested cryptocurrency and even willing to accept Bitcoin for energy exports. Moscow is showing increasing support for legalization of cryptocurrency, while experts and lawmakers are working on a comprehensive regulatory framework.

The Japanese government asked crypto trading platforms to improve monitoring and requested that they inform financial authorities about suspicious transactions. According to reports, the Financial Services Agency ( FSA) and Japan Virtual and Crypto Assets Exchange Association were searching for ways that Russian entities could avoid sanctions. They also ruled out blocking all Russian users.

Japanese law currently requires banks to verify that money transfer recipients aren’t subject to restrictions. However, cryptocurrency exchanges are not required to do this. Fumio Kishida, Japan’s Prime Minister, announced Monday that the government would prepare to introduce respective amendments during this session of parliament.

The crypto industry has had a variety of reactions to the conflict in Ukraine. While South Korean exchanges blocked Russians from accessing their platforms, major global platforms such as Binance and Kraken refused a request made by the Ukrainian government to unilaterally block all Russian accounts.