Japanese Government Proposes Amendment To Foreign Exchange Law, Prevents Russia From Using Cryptocurrency Assets

Kepala Sekretaris Kabinet, Hirokazu Matsuno. (foto; twitter @MatsunoHirokazu)

JAKARTA – Japan will revise its foreign exchange law to prevent Russia from evading Western financial sanctions following Moscow's invasion of Ukraine, via cryptocurrency assets.

According to the Chief Cabinet Secretary, Hirokazu Matsuno, in a press conference, the Government of Japan, on Monday, March 28, will submit a revision of the Foreign Exchange and Foreign Trade Law to the current parliamentary session to strengthen protections against the potential removal of sanctions by Russia through digital assets.

Japan's Prime Minister, Fumio Kishida, also called for the law to be amended in Monday's session of parliament. He also stressed the need for coordinated steps with Western allies after attending the Group of Seven (G7) summit last week in Belgium.

A finance ministry official told Reuters that discussions were ongoing about the proposed amendments. But he said he could not provide further details.

"The proposed revision allows the government to apply the law to crypto asset exchanges such as banks and requires them to research whether their clients are targets of Russian sanctions," said Saisuke Sakai, senior economist at Mizuho Research and Technologies, quoted by Reuters.

After the invasion of Ukraine, the Japanese government has imposed asset freeze sanctions on more than 100 Russian officials, oligarchs, banks, and other institutions. Japan has also banned high-tech exports and revoked the country's most favored trade status from Russia, which has called its actions in Ukraine a "special military operation".

Earlier this month, Japan's financial regulatory agency demanded about 30 cryptocurrency exchanges in the country not to transact assets with the target of sanctions, Russia.

Revision of laws and regulations is a stronger step in implementing these regulations. According to economist Sakai, the Kishida government may be developing a plan to revise the law given the strict rules of Western authorities on this issue, as well as Japan's high public support for sanctioning Russia.