To bring Japan’s cryptocurrency regulations to par with global standards, the Japanese cabinet has decided to enforce strict regulations regarding crypto anti-money laundering which will take effect from June 1. Last year in December, the Japanese authorities revised the anti-money laundering laws but it was not sufficient according to the Financial Action Task Force (FATF) which is an international standard organization.
A New Rule Called “Travel Rule” Introduced
According to the regulators, crypto has become very vulnerable when it comes to being used by criminals for the purpose of money laundering and other such illegal activities. By misusing crypto, criminals can show illegal funds as legitimate ones by processing them through legal channels.
The new law aims to eradicate the root cause of money laundering activities. According to the new law, it is now mandatory for companies dealing with cryptocurrency to submit the customer’s information to the regulators. Also, the sender and recipient’s names and addresses should also be presented. This new feature is known as the “travel rule”.
The main target will be stablecoins and cryptocurrencies that are mostly pegged with major currencies like the US Dollar. If the companies fail to submit the information to the regulators, they have to face serious penalties.
Japan’s Progress in the Crypto Space
Japan was quite liberal when it comes to cryptocurrency. In 2023, the country decided to lift the ban on stablecoins that were issued by foreign nations. This rule was passed by the Financial Services Agency of Japan. However, it also restricted the issuance of stablecoins to fund transfer companies and banks that could provide collaterals.
Many stablecoin projects also got approval from the FSA which include Circle Internet Financial and Group J.
