New Japanese Law May Allow Seizure of Stolen Cryptocurrencies

Japan’s Ministry of Justice is reportedly considering revisions to asset seizure laws related to organized crime, including provisions that would allow cryptocurrencies to be expropriated in such cases.

If these reports are confirmed, a possible revision of the Organized Crime and Control of Proceeds of Crime Act (1999) would enable law enforcement officials and courts to control crypto assets used in criminal activities such as money laundering.

The justice ministry will first need to negotiate the issue with the Legislative Assembly before taking action, according to local media outlets including the Yomiuri Shimbun on June 4. There are also some important details that need to be ironed out, such as how the police will get access to the criminal's private key.

Negotiations with the Legislative Assembly could take place as early as next month, Jiji Press reported.

As specific laws focused on seizing funds/assets of organized crime do not clearly outline any procedures regarding the illicit acquisition of cryptocurrencies, there is concern that criminals may continue their illicit activities through unseized digital assets.

Currently, the law only outlines the types of assets that can be seized as physical property, monetary claims and movable property such as machinery, vehicles, tools and supplies, while cryptocurrencies do not fall into these categories.

Once the finer details are settled, the revised bill will need to be approved by Cabinet and then signed by Parliament, which may not meet much resistance given the nature of the proposal.

Just days ago, Japan’s parliament passed a bill banning non-banks from issuing stablecoins in order to reduce systemic risk and provide greater consumer protection.

According to the bill, only licensed banks, registered money transfer institutions and local trust companies can develop and issue stablecoins.