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Japan suspends crypto transactions with Russia and Belarus

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Authorities in Japan instructed its domestic cryptocurrency exchanges to cease transactions with Russian and Belarusian organizations and individuals sanctioned due to Moscow’s invasion of Ukraine. By this move, the East Asian nation joins the likes of Switzerland and Singapore in halting digital asset transactions further isolating Russia from the crypto market. 

In view of Belarus supporting Moscow’s aggression, 19 individuals, including President Alexander Lukashenko, and 15 organizations have been subjected to sanctions.

the latest development has its roots back in early March when Japan’s financial regulator and the country’s industry body announced that they were working on implementing restrictions to prevent Russia from bypassing sanctions through crypto. Japan’s Finance Minister at the time stated,

“We are closely watching the situations of settlements such as crypto assets and SPFS in order to secure the effectiveness of sanctions against Russia.”

Japan, along with the United States and other G7 nations, has frozen the assets of Russian President Vladimir Putin and certain other officials following the invasion.

According to a release, a few days ago, the G-7 leaders said, “We will ensure that the Russian state and elites, proxies, and oligarchs cannot leverage digital assets as a means of evading or offsetting the impact of international sanctions.”

Japan gov to take strict action against violators

As per sources, a total of 30 cryptocurrency exchanges based in Japan have been asked not to transfer assets targeting 44 Russian individuals. A report by Forkast further revealed that the Financial Services Agency and Ministry of Finance announced the penalties against violations.

In the joint statement, the agencies informed that crypto exchanges making unauthorized payments to sanctioned individuals could invite fines up to 1 million yen [$8,500], with individuals facing jail time of three years.

The government also asked the exchanges to monitor crypto-assets and report to financial authorities of any suspicious transactions that may involve those who are subject to the sanctions.

Last year, cryptocurrency transactions over exchanges in Japan jumped 51% in the first 11 months to 103 trillion yen [$900 billion], based on data compiled by the Japanese Virtual Currency Exchange Association. But even as the local industry kept growing, the country’s presence in global crypto markets has been waning and that has further affected due to the current situation. 

Belarus signs official order allowing free circulation of cryptocurrencies

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Declaring his formal support Belarusian President Alexander Lukashenko has signed a decree endorsing free-flow of circulation of cryptocurrencies such as Bitcoin [BTC]. Announcing the same through the president’s press office on Monday, Lukashenko signed the official order under the title “On the register of virtual wallet addresses and the circulation of cryptocurrency.”

The decree document specifically highlights the process and standards for securing cryptocurrency from criminals by the government. The published document offers a legal basis for Belarus Hi-Tech Park to establish and manage a register of crypto wallet addresses used in illegal activities.

Through the above measure, the order intends to protect crypto investors from potential losses and to “prevent unintentional involvement in activities prohibited by law.”

Furthermore, the document also entailed that the country’s council of ministers is required to take appropriate measures to enforce the decree within three months after its publication. The latest announcement reflects Belarus’s liberal outlook towards the digital assets industry.

Belarus’s friendly stance vis-à-vis Russia’s regulatory limbo

In 2017, Belarus President Alexander Lukashenko liberalized the usage of cryptocurrency, allowing users to own, mine, and trade digital assets for other tokens or currencies. While the country’s administration banned paying with cryptocurrencies for goods and services, institutional firms were however allowed to trade in them and create new tokens through the residents of Hi-Tech Park.

According to a study conducted by Blockchain data platform, Chainalysis placed Belarus in the third position among the countries in Eastern Europe after Ukraine and Russia in its cryptocurrency adoption index, quoting its strong peer-to-peer activity.

As Belarus moves faster toward cryptocurrency adoption, its key economic and political allies continued to maintain uncertainty on crypto regulation despite the government approving it last week

Russia, in January 2021 adopted its “On Digital Financial Assets” law, remained stuck as its various financial regulators continue to have disagreements on how to regulate crypto in the country.

Even though the Russian government formally approved the concept of crypto regulation last week, the Bank of Russia continues to mount opposition on the same. As per local reports, the Russian central bank once again is proposing to prescribe a ban on cryptocurrency circulation in Russia on Tuesday.