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Japan will revise its foreign exchange law to target cryptocurrency as a means of evading sanctions

The Japanese government is aiming to push through a reform of the country’s Foreign Exchange Act in order to crack down on the usage of cryptocurrency as a method of evading Russian sanctions.

The government is collaborating with “relevant parties” to make revisions before submitting a bill to Japan’s 208th Diet session, according to Chief Cabinet Secretary Hirokazu Matsuno, who spoke at a press conference on Monday.

Following Russia’s invasion of Ukraine on February 24, the West and its allies rushed in lockstep to impose economic sanctions on the former Soviet republic. Legislators have chastised cryptocurrency for its role in dodging penalties.

A reform to the legislation would allow the Japanese government to set legal guidelines for how crypto exchanges are regulated in the nation, as well as compel them to look into possible cases of sanctioned Russian targets.

Foreign investment restrictions in Japan are divided into two categories: those based on the Foreign Exchange and Foreign Trade Act and those based on particular laws. The “Forex Act” aims to place various limits on overseas investors’ foreign direct investments.

Fumio Kishida, Japan’s Prime Minister, said on Monday that in order to reinforce sanctions against Russia, the government needed to pass an amendment to remove what it perceives as a loophole exploited by cryptocurrency.

According to Kyodo News, Russia’s Foreign Ministry announced earlier this month that it would cease talks with Japan on a postwar peace treaty, which some saw as a knee-jerk reaction to Japan’s sanctions against Moscow for its Ukrainian incursion. Russia’s military action has been roundly chastised by Tokyo.

“Russia’s actions are irrational and completely unacceptable,” Kishida remarked at the time. “Russia’s aggressiveness on Ukraine has resulted in all of the current issues.”

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