• Japan is imposing stricter anti-money laundering laws targeting cryptocurrency transactions from June 1.
• The new measures include the “travel rule,” which requires financial institutions to transmit customer information for tracing criminal proceeds.
• In 2019, the FSA introduced comprehensive guidelines for issuing and managing stablecoins, laying the groundwork for robust regulatory oversight in Japan.
Japan Imposes Stricter Crypto Anti-Money Laundering Measures
Japan’s Cabinet has implemented stricter anti-money laundering measures to align its legal framework with international standards, explicitly targeting cryptocurrency asset transactions that have become increasingly vulnerable to money laundering activities. The new measures are set to be enforced from June 1.
Travel Rule
The prominent feature of the new framework is introducing the “travel rule,” aimed at bolstering tracing criminal proceeds. Under this rule, financial institutions involved in cryptocurrency transfers must transmit customer information to the subsequent institution, including the sender’s and recipient’s names and addresses. Failure to comply with corrective orders from authorities may result in severe criminal penalties.
Lift of Ban on Foreign-Issued Stablecoins in 2023
As previously reported by crypto news outlet in December last year, Japan’s Financial Services Agency (FSA) intended to lift the ban on foreign-issued stablecoins in 2023 as part of revised laws enacted that month. The proposed regulations for stablecoins aim to regulate all virtual currencies and restrict their issuance exclusively to banks and fund transfer companies that can provide collateral assets so domestic entities can engage in foreign stablecoin transactions adhering existing guidelines for asset management and anti-money laundering measures.
2019 Guidelines Set Forth by FSA
In 2019, the FSA introduced comprehensive guidelines for issuing and managing stablecoins, laying the groundwork for robust regulatory oversight in Japan. These guidelines defined stablecoins as cryptocurrencies pegged to fiat currency or other assets, outlining requirements that stablecoin issuers must satisfy to operate within the country.
Conclusion
The Japanese government is taking steps towards enforcing stricter anti-money laundering measures targeting cryptocurrency transactions while also introducing regulations on virtual currencies such as stablecoins with an aim towards protecting investors while encouraging innovation within a secure environment.