Japan to Implement New Crypto Exchange Regulations

  • The proposed changes to Japan’s Foreign Exchange and Foreign Trade Act will require crypto exchanges to block transactions connected to sanctioned individuals.
  • The move is specifically targeted at sanctions against Russia following its military actions in Ukraine.
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Japan is planning to introduce a new law that will put crypto exchanges under the same laws that govern banks in the country, Japan’s Chief Cabinet Secretary, Hirokazu Matsuno said in a press conference on 28 March.

According to the official, the government will soon submit a bill that will revise its Foreign Exchange and Foreign Trade Act laws to include cryptocurrency exchanges. Japan’s newly elected prime minister, Fumio Kishida, has also expressed his support for the proposed revision, and called for coordinated moves with Western allies to enforce these new laws.

The proposed changes to Japan’s foreign exchange laws will require crypto exchanges, just like banks, to verify and flag transactions connected with sanctioned individuals and groups. The move is specifically targeted at sanctions against Russia following its military actions in Ukraine, making it harder for Russia to evade these sanctions using crypto.

Earlier this month, Japan’s government issued a plea to crypto exchanges in the country, asking them to refrain from allowing transactions connected to sanctioned targets. While a body representing crypto exchanges in the country responded positively to the request, the new law will make it a legal compulsion to block transactions connected to sanctioned individuals.

Following Matsuno’s press conference on Monday, exchanges revealed they have already started “confirmation of the screening status of each member for reliable screening”, and are exploring the possibility of using a blockchain analysist tool for a more efficient screening.

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