Japan to revise crypto exchange laws to curb possible loopholes for Russia

  • Japan is set to revise its crypto exchange laws in a move meant to curb any loopholes that Russia could exploit to evade crippling Western sanctions.
  • The country’s Prime Minister called for the amendments today and called for more coordinated efforts with Western allies after attending the G7 summit.

The crackdown on Russia is about to get even tighter as one of the world’s largest crypto markets revises its crypto exchange laws to end any loopholes that President Vladimir Putin and his cronies might be looking to exploit.

Japanese Prime Minister Fumio Kishida called for the exchange law to be amended today, March 28. Speaking during a parliamentary session, Kishida also called on Japan to work more closely together with its Western allies to ensure that Russia has no way of circumventing the crippling sanctions that the U.S, the EU, and other economic powerhouses have imposed.

Kishida’s government will submit a revision of the Foreign Exchange Act and Foreign Trade Act to the legislature in its current session, Chief Cabinet Secretary Hirokazu Matsuno further revealed during a press conference.

So far, the proposed amendments to the bill haven’t been revealed. One Finance Ministry official told Reuters that these amendments are being discussed currently by top officials in the government, but couldn’t provide any further details.

However, one economist told the outlet that he believes the amendments will be geared towards bringing crypto exchanges under the same scrutiny as commercial banks, a move that’s being considered elsewhere, although for different reasons.

Saisuke Sakai, the senior economist at Mizuho Research and Technologies, remarked, “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.”

Japan has been one of the many nations that have cracked down on Russia as a punitive measure for its invasion of Ukraine, which the Putin government still brands as a “special military operation,” despite possibly losing 15,000 troops in Ukraine.

Following the invasion, Japan has frozen the assets of over 100 Russian oligarchs and institutions, among other measures.

The Asian economic giant, which is the largest after the US and China, has also set its sight on crypto exchanges and their possible use by Russians to evade sanctions. Two weeks ago, the Financial Services Agency ordered local exchanges not to process any transactions linked to Russia and Belarus. The order followed a Group of Seven (G7) summit in which the big economic giants expressed concerns that Russia was turning to Bitcoin to evade sanctions (and they may have been right).

At the time, a senior official commented:

We decided to make an announcement to keep the G7 momentum alive. The sooner the better.