Japan Rewrites Law To Stop Russia’s Evasion of Sanctions via Crypto

Key Insights:

• Japan amends foreign exchange law to cut crypto as means for Russia to evade sanctions.
• Japan has urged crypto firms to comply with international sanctions against Russia.
• The govt. hit asset-freeze sanctions on over 100 Russian officials, oligarchs and banks.

As Moscow faces a financial meltdown, crypto has come under scrutiny for its potential as a conduit for Russians seeking a way out of sanctions. As a result, governments such as the UK and US have issued guidance clarifying crypto firms to comply with sanctions against Russia.

Japan Blocks Russia From Using Crypto To Skirt Sanctions

Japan announced on Monday, the revision of foreign exchange regulations to end Russia from using crypto to evade sanctions.

A top government official passed the decision to amend its Foreign Exchange and Foreign Trade Act during a parliament session. 

The government will roll out the revised bill to prevent sanctioned nations from turning to cryptos to escape sanctions, Chief Cabinet Secretary Hirokazu Matsuno said during a press conference today.

The country’s Prime Minister, Fumio Kishida, also emphasized revising the law, coordinating with western allies following the G7 summit earlier this month.

“Discussions are underway” regarding the proposed amendment, an official from the Ministry of Finance told Reuters. However, he declined to comment on what the revision could be and the deadline for releasing the new rewritten document.

According to Saisuke Sakai, a senior economist from Mizuho Research, the amendment follows support from the public for sanctioning Russia. He told Reuters,

“[The revised bill] 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.”

Japanese authorities ordered crypto exchanges to comply with Russian sanctions and not to conduct any crypto transactions involving Russian and Belarusian accounts.

The country’s financial watchdog – Financial Services Agency – stated “sooner the better” to keep the G7 momentum alive.

What Is the Law All About?

In Japan, cryptos and utility tokens such as Bitcoin (BTC) and Ethereum (ETH) are regulated as ‘crypto assets’ under the Japanese Payment Services Act.

In addition, stablecoins such as Tether (USDT), USD Coin (USDC) will likely come under either crypto assets or means of payment in fund remittance transactions, depending on whether the stablecoins are redeemable in fiat currency.

The foreign exchange act enables proper expansion of foreign transactions by conducting the minimum necessary control or coordination of transactions. This brings balance and stability to currencies.

Amending the law to include crypto in foreign transactions would imply stringent rules. This would make crypto exchanges and firms in Japan scrutinize sanctioned countries and individuals.