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On October 14th, the Japanese government passed a cabinet decision amending six foreign exchange laws to step up the fight against money laundering. report that.
The revised bill will strengthen Know Your Customer (KYC) rules for cryptocurrency exchanges and expand money laundering penalties for all institutions.Bill will be submitted for current approval Diet session.
The revision is not exactly aimed at cryptocurrency companies. According to the report, the Japanese government has aimed to strengthen its anti-money laundering measures since September 2010.
In addition to various new undisclosed preventive measures, the state gives itself the right to freeze the assets of individuals and institutions involved in crimes related to money laundering.
However, given the widespread use of cryptocurrency exchanges and mixers, Japan considers digital asset trading to be a potential money laundering tool. will be After the change, platforms that offer cryptocurrency exchange services will be obliged to perform a more detailed KYC process to verify the identity of the user.
The Japan Crypto Asset Exchange Association (JVCEA) has reportedly asked its member exchange platforms to take separate precautions against money laundering. Major crypto exchange platforms in the region, such as CoinCheck and GMO Coin, have responded by tightening their rules.
Japan has become the first country to introduce a legal framework regulating cryptocurrencies. include Specific rules under the Payment Services Act of May 2016. The law came into force in 2017 and recognized crypto-assets like Bitcoin (BTC) as legal tender.
Since then, the country has introduced new measures every few years, making it difficult for crypto businesses to operate.
CoinCheck, one of Japan’s most famous exchange platforms, suffered a massive hack in early 2018, losing about $500 million. In 2019, all cryptocurrency exchanges were subject to the country’s anti-money laundering and combating financial terrorism rules.
Two years later, in 2021, Japan has applied additional regulations specific to the DeFi protocol. In 2022, after the fall of Terra Luna, the country passed another bill restricting the use of stablecoins to licensed banks only.
Crypto businesses are being forced out of the country due to continued tightening regulations. Most of them choose to relocate to nearby crypto-friendly countries like Singapore.
The government has also noticed a rapid decline in the number of cryptocurrency businesses. In August 2022, Rakuten Group president Hiroshi Mikitani criticized himself, saying the rules were too strict for cryptocurrencies to thrive. He said:
Most people go to Singapore because starting a business in Japan is silly.
After acknowledging the facts, the Japanese government has announced a twist on crypto tax regulation.
Japanese Prime Minister Fumio Kishida says 2022 will be the first year to create startups, and the government may cut cryptocurrency tax rates to encourage cryptocurrency startups to set up operations in Japan. said there is.
Japan currently taxes all realized and unrealized profits from cryptocurrencies at 30% for corporate investors and up to 55% for individual investors. The government has not disclosed any tax rates that may reduce these rates.
