Japan Approves Travel Rule Adoption – Crypto Exchanges Face Compliance Challenges?

Japan Approves Travel Rule Adoption - Crypto Exchanges Face Compliance Challenges?


The Japanese government has approved the adoption of the Travel Rule, but domestic exchanges are experiencing difficulty with adoption, leading to crypto withdrawal difficulties.

The Japanese Government has approved the adoption of the Travel Rule, with a new law set to come into force next month.

On the other hand, domestic exchanges are experiencing difficulty with adoption, leading to cryptocurrency withdrawal difficulties.

Per Sankei News, the cabinet of ministers has signed off on an amendment to the Act on Prevention of Transfer of Criminal Proceeds, which will “come into effect on June 1.”

The Travel Rule is a regulatory requirement designed by the Financial Action Task Force (FATF).

The FATF is an international money laundering and terrorist financing watchdog.

The rule requires cryptocurrency service providers to share “originator and beneficiary information alongside virtual investment transactions.”

The FATF asserts that this measure helps “prevent criminal and terrorist misuse.”

On the other hand, in numerous countries, exchanges have been left to develop their own compliance solutions.

And this factor has often led to confusion in the case of sharing the required data.

Lawmakers have been working on revisions to the act after the FATF argued that Japan’s measures on this front were “inadequate.”

Non-compliant Japanese cryptocurrency corporations will be announced with “corrective orders,” under the new law.

And those who do not comply “will be subject to criminal penalties,” the media outlet noted.

Japan and the Travel Rule – Can Cryptocurrency Exchanges Comply in Time?

Most Japanese exchanges have been trying to adopt Travel Rule-complaint policies ahead of June, in anticipation of the legal change.

On the other hand, the procedure has proven far from bug-free.

A chart showing trading volumes on the Japanese market-leading bitFlyer crypto exchange over the past 12 months.
Trading volumes on the Japanese market-leading bitFlyer cryptocurrency exchange in the previous 12 months. (Source: CoinGecko)

Earlier these 30 days, the Japanese media outlet CoinPost informed that plenty of of the nation’s top exchanges were experiencing serious complications with their Travel Rule compliance solutions.

The chaos means some Japanese cryptocurrency exchange customers are as of now unable to withdraw their funds to other domestic platforms.

Bitbank posted on May 18 that its users will “not be able to send cryptoassets” directly to “some” rival platforms, including Coincheck and bitFlyer “in the near future.”

The media outlet wrote:

“This is owing to the fact that each company has a different information notification system for Travel Rule compliance.”



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