US diplomats urge Japan to pull through with digital asset sanctions on Russia

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Representatives of the United States to Japan have called on the Japanese government to intensify pressure on digital asset exchanges and block reward miners to cut ties with Russia as part of economic sanctions. 

Financial Times reports that the diplomats requested several of the 31 licensed digital assets exchanges and miners in Japan to halt their operations in Russia. The requests have been backed by Japan’s financial watchdog, the Financial Services Agency (FSA).

According to the report, the FSA has demanded that the notified entities end all their remaining operations in Russia. The directive applies to even subsidiaries of the Japanese licensed entities that may have links to Russia. 

Notably, this is not the first time the FSA is cracking down on digital assets firms with ties to Russia. Back in March, Japan introduced policies to tighten exchange policies in a bid to prevent Russia from circumventing international sanctions through the market. 

The regulation, which was in conjunction with the Finance Ministry, imposed a ban on firms processing digital assets transactions involving sanctioned individuals or entities in Russia and Belarus. Failure to keep up with the regulation comes with severe fines or imprisonment. 

Japan also has a wide array of sanctions targeted at Russia aside from the tightened digital assets regulations. The country has banned imports of gold from Russia, as well as frozen Russian assets within its shores, and outlawed providing accounting services to the country. 

Concerns over Russia’s use of digital assets to evade sanctions increasing

Like Japan, much of the international community has also introduced economic sanctions on Russia since it declared war on Ukraine. During the recent G20 summit, the Department of State reiterated the U.S. government’s resolve to impose strict sanctions on Russia. 

It described the war as an “affront to the international rules-based order” and a damaging event that the G20 has to kick back against through cooperation. 

国務省は、「米国は、G20およびその他の国際パートナーとの関与を継続し、ロシアのウクライナ侵攻に起因する人道的課題、とりわけロシアの侵略戦争が世界の食料およびエネルギー安全保障に及ぼす悪影響に対処していく」とツイートしました。 https://t.co/NIzKSzkte4

— アメリカ大使館 (@usembassytokyo) July 8, 2022

This is one reason the international community has been accelerating efforts to bring digital assets into the regulatory fold even as Russia races to solidify its digital assets and blockchain technology adoption. 

In the U.S., the Treasury Department has spearheaded sanctions on Russia. The Treasury has added several digital asset wallets and entities to its list of specially designated entities that U.S. citizens are prohibited from doing business with.

Watch: The BSV Global Blockchain Convention panel, The Future of Digital Asset Exchanges & Investment

https://www.youtube.com/watch?v=RzJsCRb6zt8&t=7800s