Japanese authorities asked cryptocurrency exchanges to stop processing transactions involving digital assets that are subject to asset freeze regulations imposed on Russia and Belarus as a result of the Ukraine conflict.
The decision follows a Friday Group of Seven (G7) declaration in which Western countries said they will impose sanctions on illicit Russian persons who transfer riches via crypto assets.
The United States, the European Union, and other allies upped economic pressure on Russia on Friday to punish it for its invasion of Ukraine. Among the efforts adopted were those aimed at excluding Russia from special economic and commercial considerations.
According to US Vice President Joe Biden, the fresh moves would collectively harm Russia’s financial system, which is already suffering from previously announced international sanctions that have devalued the country’s currency and forced the closure of its stock market.
The G7 advanced economies are getting more concerned that Russian enterprises are using cryptocurrency to bypass financial sanctions imposed on the nation for invading Ukraine.
The US Treasury Department has issued fresh guidelines requiring bitcoin exchanges operating in the US to refrain from transacting with sanctioned companies. Cryptocurrency has been a point of contention during the Ukraine-Russia war.
The Japanese government will step up enforcement against illegal cash transfers using crypto assets, the Financial Services Agency and the Ministry of Finance stated in a joint statement.
Hefty Penalty And Sentence
Despite the fact that the G7 industrialised countries and G20 powerhouses have all urged for more regulation of “stablecoins,” Japan has lagged behind the global trend.
Japan’s new programme will penalise those who make unlawful payments to sanctioned individuals with up to three years in jail or a one million yen fine. Furthermore, non-fungible tokens are seen as a kind of payment. Japan has 31 bitcoin exchanges as of March 4, according to an industry body.
In the majority of cases, bitcoin companies have complied with the sanctions. Notably, Kraken has not taken this step, and CEO Jesse Powell has emphasised that doing so would need legal reason.
Only a handful remain operational, like Trezor, and Binance has terminated the accounts of those on a sanctions list.
Meanwhile, Coinbase suggested that technologies created in the bitcoin industry might be used to ensure compliance with sanctions. One of the world’s largest exchanges has blocked around 25,000 wallets associated with Russians.