Japan finds loophole in crypto sanctions against Russia, seeks Forex laws revision

Japan is finding ways to prevent Russia from evading sanctions.

Japanese prime minister Fumio Kishida said at a parliament session Monday that Russia may avoid sanctions through crypto assets, Reuters reported Monday. The statement came following last week’s Group of Seven emergency summit in Belgium, where officials from the seven countries pledged new sanctions against Moscow.

In order to strengthen the effectiveness of economic sanctions, the Japanese government plans to propose a revised version of the Foreign Exchange and Foreign Trade Act, or Forex Act, to the parliament, Chief Cabinet Secretary Hirokazu Matsuno revealed in a press conference.

While details of the amendment were not revealed, 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,” Saisuke Sakai, senior economist at Mizuho Research and Technologies, told Reuters.

Japan is one of the several countries that imposed stringent sanctions against Russia following the country’s invasion of Ukraine. The country’s financial regulator ‘Financial Services Agency’ recently ordered domestic crypto exchanges to not process any transactions coming from or going to Russian and Belarus-based users.

In addition, the authorities asked exchanges to strengthen their monitoring of Russian-associated accounts.

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