Japan plans to amend its Foreign Exchange and Foreign Trade Law to bring cryptocurrency exchanges under banking laws, a government official said on Monday. The proposed amendment is being made to prevent countries under sanctions from taking evasive action using digital assets.
Chief Cabinet Secretary Hirokazu Matsuno said at a press conference that the government plans to introduce a bill to revise foreign exchange laws to include cryptocurrency exchanges.
Fumio Kishida, the country’s newly elected prime minister, also backed the proposed revision and called for coordinated action with Western allies to enforce the new laws.
Under the revised currency laws, cryptocurrency exchanges, like banks, will be required to verify and flag transactions related to Russian individuals or groups under sanctions.
Japan, along with most of its Western allies, has imposed various financial sanctions on Russia following its actions in Ukraine. Earlier this month, the country’s financial regulator also asked cryptocurrency exchanges to refrain from allowing transactions for purposes subject to sanctions.
However, a parliamentary amendment to the law obliges cryptocurrency exchanges to block transactions for various Russian officials, oligarchs, banks and other institutions under sanctions.
See also: Cryptocurrency does not give Russia a way out of Western sanctions
The reason for the concern that Russia is potentially trying to evade sanctions with cryptocurrency is due to the country’s growing interest in the cryptocurrency market and recent comments from the country’s ministers.
Financial sanctions against Russia forced it to look for alternative payment systems and ways to enter the international trade market. While speculation about the possible use of digital assets to circumvent trade sanctions has been one of the hottest topics of discussion, experts have dismissed such concerns as “completely unfounded.”