Japan plans to amend its Foreign Exchange and Foreign Trade Act to bring crypto exchanges under the purview of laws that govern banks, a government official revealed on Monday. The proposed amendment is being carried out to prevent sanctioned countries from taking evasive actions using digital assets.
Chief Cabinet Secretary Hirokazu Matsuno said in a press conference that the government is planning to introduce a bill to revise the foreign exchange laws to include crypto exchanges.
Fumio Kishida, the country's newly elected prime minister, also supported the proposed revision and called for coordinated moves with Western allies to enforce the new laws.
Under the revised foreign exchange laws, crypto exchanges, just like banks, will be required to verify and flag transactions associated with sanctioned Russian individuals or groups.
Japan, along with most of its Western allies, has conducted various financial sanctions against Russia after its actions in Ukraine. Earlier this month, the financial regulatory body in the country halso asked crypto exchanges to refrain from allowing transactions for sanctioned targets.
However, a parliamentary amendment to the law would make it a legal compulsion for crypto exchanges to block transactions for various sanctioned Russian officials, oligarchs, banks and other institutions.
Related: Crypto offers Russia no way out from Western sanctions
The reason for concern about Russia potentially trying to evade sanctions using cryptocurrency arises from the country’s growing interest in the crypto market and recent comments made by its ministers.
The financial sanctions on Russia have forced it to look for alternative payment systems and methods to access the international trade market. While speculations about the possible use of digital assets to evade trade sanctions have been one of the hottest topics of discussion, experts have rejected such concerns as “totally unfounded.”