Japanese law enforcement now equips with a novel method for monitoring cryptocurrency transactions

Japan Embraces Cryptocurrency Regulation with New Tools

Japan has taken a significant step forward in regulating the cryptocurrency market by adopting a suite of tools designed to support its legal framework for cryptocurrency exchanges, Initial Coin Offerings (ICOs), and other financial products and services.

The Japanese Financial Services Agency (FSA) has published extensive reports warning traders about the proliferation of scam ICOs and other methods by which criminals are seeking to defraud investors. To combat this, Japan has put guidelines in place for ICOs to discourage insider trading and set down requirements for project accountability to investors.

Exchanges operating in Japan must follow strict Know Your Customer (KYC) procedures and keep customer assets separate from their own. The new tools are being used to enforce these regulations, as well as to track transaction flows and wallet interactions.

In addition, the Japanese National Police Agency has adopted a set of tools from a private company to improve their ability to trace criminal activity on the blockchain. The adoption of these tools follows similar developments in Russia, where the Federal Financial Monitoring Service has commissioned a tool for mapping out money flows on the blockchain.

The estimated cost for law enforcement to monitor crypto crime using the new tools is approximately $315,000 for the next budget year. However, it's worth noting that Japan's budget increase for the use and training of these tools is significantly less than what has been reported for Russia's alleged plans.

The move by Japan's National Police Agency is part of the country's continued efforts to strike a balance between consumer protection and technological innovation in the cryptocurrency space. The new tools are not intended for building profiles for every law-abiding citizen or foreigner, unlike some reported plans in Russia.

Japan has taken a mostly positive stance towards cryptocurrencies, choosing to regulate the space instead of banning trade. This revelation was made by NHK, Japan's national public broadcasting organization, on August 30, 2018.

Crypto projects based in Japan are now subject to regulations similar to those for any other financial products and services. This means that they must comply with the same strict KYC procedures, anti-money laundering regulations, and other financial regulations as traditional financial institutions.

In conclusion, Japan's adoption of these new tools marks a significant step forward in the regulation of the cryptocurrency market in the country. By enforcing strict regulations and investing in tools to trace criminal activity, Japan is demonstrating its commitment to protecting consumers and promoting a safe and secure cryptocurrency market.