Japan Joins Switzerland, Singapore In Halting Crypto Transactions With Russia, Belarus

Japanese authorities have ordered crypto exchanges in the country to halt processing cryptocurrency transactions, which involved crypto assets under sanctions against Belarus and Russia due to the war in Ukraine.

Following the G7 nations' vow to tighten crypto sanctions, Japan’s Financial Services Agency (FSA) and ministry of finance on Monday jointly released the list of penalties for crypto exchange platforms that do not comply with sanctions on Russia. Platforms that make unauthorized payments to sanctioned targets, including cryptocurrencies, could be fined up to 1 million yen or around $8,487.52 and could face imprisonment for up to three years.

Several reports revealed that 30 cryptocurrency exchanges based in Japan had been ordered not to process the transfer of assets to 44 Russians. And since Belarus supports Russia's aggression, Japan sanctioned 19 Belarusians, including President Alexander Lukashenko and 15 organizations.

All crypto exchange platforms in Japan are now required to report to the FSA, the government agency in charge of overseeing banking, securities and exchanges in the country, should they find transfers from sanctioned targets. Since the onset of the war, there have been growing concerns among G7 members that Russian entities might use cryptocurrency to evade or avoid financial sanctions.

"We are closely watching the situations of settlements such as crypto assets and SPFS in order to secure the effectiveness of sanctions against Russia," Finance Minister Shunichi Suzuki said, referring to the Russian financial messaging system.

In 2021, transactions on cryptocurrency exchange platforms in Japan soared 51%, or by about $900 billion, as per data compiled by the Japanese Virtual Currency Exchange Association. Japan is considered a country with the world's most progressive regulatory climate for cryptocurrencies. It has recognized Bitcoin and other digital assets as legal property.

Japan is the latest country to join Switzerland and Singapore in suspending digital asset transactions to isolate Russia from the cryptocurrency market further. A couple of weeks ago, Switzerland announced its plan to seize Russian crypto assets within its borders, a shift from its deeply rooted tradition of neutrality.

Singapore also announced the banning of crypto payments that could violate Russian sanctions. South Korea ordered the blocking of Russian crypto addresses in the early part of March.