Japan To Revise Foreign Exchange Law to Prevent Russia Sanction-Busting Via Crypto

The government is preparing a revision to the country's Foreign Exchange and Foreign Trade Act aimed at blocking Russia from skirting Western sanctions through digital assets.

Japan will revise its foreign exchange law to prevent Russia from evading Western financial sanctions through cryptocurrency assets, Japan's Prime Minister Fumio Kishida said today.

As reported by Reuters, the government will submit a revision of the Foreign Exchange and Foreign Trade Act to the current parliament session to strengthen protections against potential sanction-busting by Russia through digital assets.

The revision "presumably enables the government to apply the law to crypto-asset exchanges like banks and oblige them to scrutinise whether their clients are Russian sanction targets," said Saisuke Sakai, senior economist at Mizuho Research and Technologies. A finance ministry official told Reuters discussions were under way about the proposed amendment, saying he could not provide further details.

Following Moscow's invasion of Ukraine, the Japanese government has slapped asset-freeze sanctions on more than 100 Russian officials, oligarchs, banks and other institutions. Earlier this month, Japan’s Financial Services Agency (FSA) and the Japan Virtual and Crypto Assets Exchange Association(JVCEA) started discussing the establishment of rules to stop cryptocurrency transactions by people subject to economic sanctions, demanding about 30 crypto exchanges to stop asset transactions with sanction targets.