Kavan Choksi: Japanese Crypto Firms To Comply with Sanctions Against Russia

Last month, authorities directed cryptocurrency exchanges not to process crypto-assets transactions subject to asset-freeze sanctions imposed on Russia and Belarus. In this post, Kavan Choksi examines the effects on Japan's crypto market. G7 advanced economies are increasingly concerned about Russian entities using cryptocurrencies to circumvent financial sanctions imposed on the country. As a result, the US Treasury Department issued new guidance requiring US-based cryptocurrency firms not to engage in transactions with sanctioned targets. According to a joint statement from the FSA and the Ministry of Finance, Kavan Choksi believes it was best for Japan to strengthen measures to prevent fund transfers using crypto assets, which would violate sanctions. Kavan Choksi notes there were 31 crypto exchanges in Japan as of March 4. Given the new market's popularity, global regulators are concerned about its safety for investors. The Securities and Exchange Commission cited the possibility of market manipulation as one of the primary reasons for rejecting several applications for bitcoin exchange-traded funds. According to Rakuten Group Inc, using bank deposits for convenient online payments may seem like a revolutionary idea in cash-loving Japan, where direct debits are surprisingly uncommon. The e-commerce behemoth has a popular loyalty program that has given away billions of dollars in points. Buyers can use these points to pay for anything from booking a beauty salon appointment to paying for groceries or settling a utility bill. Now that Rakuten has integrated East Japan Railway Co.'s Suica payment system into its app and used its e-money dominance to create a bank with $7 trillion in deposits, traditional financial institutions are considering ways to re-enter the game. That is most likely the driving force behind DCJPY, explains Kavan Choksi. While the blockchain component of the stablecoin project may be new and exciting, what will matter to consumers is how easy it is to use in everyday situations.