The step was taken after a Group of Seven (G7) statement on
Friday that said Western nations "will impose costs on illicit Russian
actors using digital assets to enhance and transfer their wealth."
There are growing concerns among G7 advanced economies that
cryptocurrencies are being used by Russian entities as a loophole for financial
sanctions imposed upon the country for invading Ukraine.
The U.S. Treasury Department issued new guidance on Friday
that required U.S.-based cryptocurrency firms not to engage in transactions
with sanction targets.
"We decided to make an announcement to keep the G7
momentum alive," said a senior official at Japan's Financial Services
Agency. "The sooner the better."
The Japanese government will strengthen measures against the
transfer of funds using crypto assets that would violate the sanctions, the FSA
and the Ministry of Finance said in a joint statement.
Japan has lagged a global shift among financial regulators
in setting stricter rules on private digital currencies, while the G7 rich
powers and the Group of 20 powerhouses have all called for greater regulation
of "stablecoins".
Unauthorised payments to targets under sanctions, including
through crypto assets, are subject to punishment of up to three years in prison
or a 1 million yen ($8,487.52) fine, the FSA said on Monday.
There were 31 crypto exchanges in Japan as of March 4,
according to an industry association.
Global regulators remain concerned about the safety of the new
market for investors, given its surge in popularity. The U.S. Securities and
Exchange Commission has cited the potential for market manipulation as one of
the primary reasons for rejecting several applications for spot bitcoin
exchange-traded funds. -Reuters