Japan Reviews Legislation to Seize Illicit Crypto Assets

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Key Takeaways

  • The Japanese Justice Ministry is reportedly considering reworking an asset seizure law to provide a provision allowing crypto assets to be seized in cases of organised crime.
  •  A possible revision to the Act on the Punishment of Organized Crimes and the Control of Proceeds of Crime (1999) will indeed allow federal agents and courts to capture crypto assets used in criminal activity such as money laundering.
  • According to local media reports, the Justice Ministry will need to discuss the situation with the Legislative Council first before proceeding.

The country’s justice ministry decided to grant authorities the power to seize illicit cryptoassets just days after Japan’s parliament passed a bill restricting stablecoins.

It’s expected that this will include a clause that allows crypto to be hijacked in such situations. A proposed amendment to the Act on Organized Crime and the Control of Proceeds of Crime (1999) would allow law enforcement and judges to confiscate crypto-assets used in illegal activities like money laundering.

Before moving forward, the Justice Ministry will need to consult with the Legislative Council on the matter.

Currently, the law governing organised crime punishment does not clearly state how to come to grips with crypto-assets deemed illegal. Crime networks may exploit this by using cryptocurrency to launder money and break laws.

In January 2018, hackers used malicious emails to steal $534 million from cryptocurrency exchange CoinCheck in Japan, making it the country’s largest cryptocurrency loss.

In August 2021, hackers stole nearly $100 million from Japanese crypto exchange Liquid, mostly in bitcoin and ether.

The ministry will take assistance from the Legislative Council to guarantee that all criminal assets are impounded. As early as this month, the latter will recommend the Justice Minister. They will begin ongoing discussions to change the law after that.

The only assets that can be seized under current legislation are physical property, monetary claims, and mobile assets such as machinery, cars, tools, and supplies. Cryptocurrency, on the other hand, does not fit into any of those categories.

Regulators around the world are concerned about the risks of financial fraud and money laundering, and they are under mounting demands to pass cryptoasset legislation as digital currencies become more ubiquitous.

Concealment of cryptocurrencies may be challenging legally due to the fact that most cryptocurrencies are resilient to seizure. Before the government can access the illicit funds, it will need to know the individual’s identity, bitcoin addresses, and private keys.

The study was published just days after the Japanese government passed legislation prohibiting non-banking entities from producing stablecoins. This is part of a larger effort to lower system risk and improve consumer safety.

Only licensed banks, registered money transfer agencies, and local trust organisations are permitted to develop and issue stablecoins under the law.

There will be no further delays with the law amendment if all of the required details are managed to keep in the correct order. It would be approved by the cabinet, then signed by the parliament. With such moves and the essence of the proposal, there would be no opposition to its implementation.

In addition, the law specifies some of the types of assets that officials may seize. However, the fact that cryptocurrency does not correspond to any type is still perplexing. Money claims, physical property, and mobile assets such as vehicles, supplies, tools, and machinery are all on the list.

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Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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