Russia’s economy has been tumbling under the pressure of sanctions imposed by the US and its Western allies. Various regulatory bodies have now expressed concerns that Russia could use cryptocurrencies to avoid these sanctions.
The Japanese financial market regulator is now looking at how it can close any loopholes to ensure Russia feels the full effect of these sanctions. Japan’s action echoes the sentiments made by the president of the European Central bank, Christine Lagarde, who has also called for a comprehensive crypto regulatory framework.
Japan cracking down on cryptocurrency transactions
One of the ways that Japan seeks to restrict the use of cryptocurrencies is by ensuring that Russian individuals and entities that have been targeted by the sanctions will not transfer their wealth into digital assets.
One of the major sanctions that have dealt a blow to Russia is the removal of the country’s banks from the SWIFT system. The ruble has fallen by around 30%, and with the rising inflation levels, crypto activities have been high in the country.
To ensure that there are no loopholes where sanctioned Russian oligarchs and institutions will use crypto assets to evade the sanctions, the Financial Services Agency (FSA) and the Japan Virtual and Crypto Assets Exchange Association are holding discussions aimed at realizing the best solutions.
Officials from the two bodies have clarified that regulations will not target all Russian users. Shunichi Suzuki, the Finance Minister in Japan, said, “We are closely watching the situations of settlements such as crypto assets and SPFS to secure the effectiveness of sanctions against Russia.”
On the other hand, the head of JVCEA, Satoshi Hasuo, who is also the head of Coincheck exchange, noted that the firm would work with the FSA to discuss the measures to be taken to ensure compliance with the imposed sanctions. The executive also advocated for investigations to ensure no one uses cryptocurrency assets to avoid the sanctions.
Hasuo has also offered several recommendations that can be used to ensure that digital assets are not used by sanctioned individuals. One of these recommendations is the blockage of bank transactions with cryptocurrency miners based in Russia. The executive is also advocating for the freezing of digital assets held by government officials in Japanese exchanges.
Preventing Russia from escaping sanctions
The US and its allies have been taking action to ensure Russia does not escape the imposed sanctions. Earlier this week, the US Justice Department announced the formation of a specialized task force that will “target the crimes of Russian officials, government-aligned entities, and those who aid or conceal their unlawful conduct.”
The task force will seize the assets of individuals and organizations that may have violated the sanctions. The task force will conduct various investigations, including blockchain data analytics, foreign intelligence, tracing and more.
The UK has also urged all the exchanges operating in the country to ensure that economic sanctions are followed. However, the leading cryptocurrency exchanges such as Binance, Kraken and Coinbase have said they will not freeze the accounts of all Russian users.
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