Japan asks crypto exchanges to act in line with sanctions against Russia

Japan requested on Monday that crypto exchanges not process transactions involving crypto assets subject to asset-freeze sanctions against Russia and Belarus, officials said on Monday.

The request was made after a Group of Seven (G7) statement on Friday that said Western nations "will impose costs on illicit Russian actors using digital assets to enhance and transfer their wealth."

There are growing concerns among G7 advanced economies that cryptocurrencies are being used by Russian entities as a loophole for financial sanctions imposed upon the country for invading Ukraine.

The U.S. Treasury Department issued new guidance on Friday that required U.S.-based cryptocurrency firms not to engage in transactions with sanction targets. 

"We decided to make an announcement to keep the G7 momentum alive," said a senior official at Japan's Financial Services Agency. "The sooner the better."

The government will work as one to strengthen measures against the transfer of funds using crypto assets that would be in violation of the sanctions, FSA and the Ministry of Finance said in a joint statement.

Unauthorised payments to targets under sanctions, including in crypto assets - such as cryptocurrency and non-fungible tokens - are subject to punishment of up to three years in prison or a 1 million yen ($8,487.52) fine, the FSA said.

There were 31 crypto exchanges in Japan as of March 4, according to an industry association.

($1 = 117.8200 yen)