Japan will revise its foreign currency law to stop Russia from evading economic sanctions through cryptocurrency, per Reuters.
Today, Hirokazu Matsuno, Chief Cabinet Secretary, stated that the government would submit a revised version to parliament of the Foreign Exchange and Foreign Trade Act.
According to Saisuke Sakai, senior economist at Mizuho Research and Technologies, the revised legislation “presumably allows the government to apply it to crypto-asset trading platforms like banks and require them to examine whether their clients are Russian sanction targets.”
Japan is not the only country to take aim at crypto in an effort to reduce the possibility of Russian sanctions evasion.
In April, Japan’s Financial Services Agency and Japan Virtual and Crypto Assets Exchange Association began looking at ways to block cryptocurrency transactions from Japan’s banned list.
Shunichi Suzuki (Japan’s Finance Minister) stated at the time that Japan was “closely monitoring the situation of settlements like crypto assets and SPFS to ensure effectiveness of sanctions against Russia.”
SPFS stands for “System for Transfer of Financial Messages,” a Russian equivalent to the SWIFT international system.
Security and cryptography
Although it seems unlikely that Russia would use cryptocurrency to remove all sanctions against the country, there are many ways Russian entities or individuals could use crypto to bypass specific sanctions.
Ransomware is one such example. It’s an industry that stuffed the pockets Russian-affiliated criminals more than any other last year.
Crane Hassold is a former FBI agent who is currently Director of Threat Intelligence at Abnormal Security. He claims that cryptocurrencies are the ” primary reason” behind today’s ransomware market.
Another method is Bitcoin mining or the use of noncompliant exchanges, which has been used in the past.
“We have seen cases before of crypto-asset exchange services that were complicit with enabling Russia’s criminals to launder large sums of money…one of these was called SUEX,” David Carlisle, Director of Policy and Regulatory Affairs at Elliptic stated earlier this month.
The U.S Treasury’s Office of Foreign Assets Control approved crypto exchange SUEX in September 2021 as an entity that was responsible or complicit with cyber-related activities against the United States.