Under the current version of Japanese law, recovering stolen crypto from criminal groups remains impossible.
Crypto assets being stolen by organized crimes are being visited with the revision of the asset seizure law, according to reports by Japan’s Justice Ministry.
If the reports are true, a potential revision to the Act on Punishment of Organized Crimes and Control of Proceeds of Crime (1999) would allow law enforcement and courts to seize crypto assets used in criminal activity such as money laundering.
According to reports from local media outlets such as the Yomiuri Shimbun on June 4, the Justice Ministry will need to first discuss the issue with the Legislative Council before moving forward. While it must also work out important details such as how officers can obtain a criminal’s private keys.
According to the Jiji Press, the talks with the Legislative Council could begin as soon as next month.
Because the specific law focusing on the seizure of funds/assets from organized crime does not explicitly outline any procedure for illegally acquired cryptocurrencies, there is concern that criminals may be able to continue illicit behavior through their unseized digital asset holdings.
As it stands, the law only specifies that physical property, monetary claims, and movable assets such as machinery, vehicles, tools, and supplies can be seized, with cryptocurrency falling into none of those categories.
Once the finer details are worked out, the amendment to the law would need to be approved by the cabinet and then signed off on by parliament, and given the nature of such a proposal, it is unlikely to face much opposition.
The report comes just days after Japan’s parliament passed legislation prohibiting non-banking institutions from issuing stablecoins as part of an effort to reduce system risk and improve consumer protections.
Only licensed banks registered money transfer agents, and local trust companies are permitted to develop and issue stablecoins under the bill.