Japan To Revise Foreign Exchange Law Targeting Crypto Over Sanctions Evasion
Japan is tightening its crypto regulation in a bid to close the gap on Russia’s sanction evasion
Japan’s Parliament House (National Diet); Source: Shutterstock
key takeaways
- Japan’s government is expected to push through a revision to its Foreign Exchange Act targeting crypto’s ability to evade Russian sanctions
- The move is in line with Western powers and their allies attempting to close, what they see, as a loophole to sanctions
Japan’s government is attempting to push through a revision of the country’s Foreign Exchange Act as it seeks to clamp down on crypto’s use as a means to evade sanctions imposed on Russia.
According to Japan’s Chief Cabinet Secretary Hirokazu Matsuno, speaking at a press conference on Monday, the government is coordinating with “relevant parties” to make adjustments before submitting a bill to the country’s 208th Diet session.
Following Russia’s invasion of Ukraine on Feb. 24, Western powers and their allies have moved in lockstep to impose economic sanctions against the former Soviet state. Crypto has been criticized by lawmakers for its role in helping sanctioned entities evade the economic punishment.
A revision to the act would enable the Japanese government to apply legal parameters around how crypto exchanges are governed within the country while forcing them to investigate potential cases of sanctioned Russian targets.
“In order to make the sanction more practical and effective, the decision was made to amend the Foreign Exchange Act…and the Finance Ministry is taking the lead,” Matsuno said.
Japan’s foreign investment regulations are split into regulations based on the Foreign Exchange and Foreign Trade Act, as well as regulations based on individual laws. The “Forex Act” seeks to impose certain restrictions on foreign direct investments made by overseas investors.
The country’s Prime Minister Fumio Kishida said Monday that to strengthen sanctions against Russia, Japan needed to push through an amendment to close what it sees as a loophole exploited by crypto.
Earlier this month, Russia’s Foreign Ministry said it would end peace talks with Japan, seen by some as a knee-jerk reaction to Japan’s sanctions against Moscow for its Ukrainian invasion, Kyodo News reported. Tokyo has heavily criticized Russia’s military campaign.
“Russia’s actions are extremely unreasonable and totally unacceptable,” Kishida said at the time. “All the current situations have originated from Russia’s aggression on Ukraine.”
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