Stop Your Crypto Operations in Russia, Washington Tells Japanese Exchanges & Miners

Exchange Japan Mining Politics Regulation Russia

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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June 26, 2023 06:54 EDT

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Washington wants Japanese regulators to convince domestic crypto exchanges and miners to cut all ties with Russia, per a new report.

The Financial Times claimed that American “diplomats” believe “several” Japanese crypto exchanges are “still running in Russia,” according to unnamed “people close to the situation.”

The diplomats reportedly want Japanese miners to pull the plug on the crypto mining operations they are operating in the Irkutsk Oblast in Southern Siberia, according to “two people familiar with the matter.”

Irkutsk has become a hotspot for miners both domestic and international in recent times, with activity stepping up after China’s mining crackdown last year.

A number of major Japanese players from a variety of sectors have invested heavily in overseas crypto mining operations – due mainly to the prohibitively high costs of mining in Japan.

Although most Japanese operators have kept the exact location of their overseas mining operations a secret, a number of East Asian investors are known to have established mining centers in Central Asia, with some thought to be working in Siberia.

As previously reported, back in March, both Japan’s top financial regulator, the Financial Services Agency (FSA), and the Ministry of Finance told the country’s exchanges to suspend all transactions with sanctioned Russians and Belarusians.

But Washington now wants exchanges to go a step further – and cease all Russia-related operations.

Cryptonews.com spoke to an employee at a Japanese exchange who, on condition of anonymity, stated that they were aware of an American request, but added that their firm had no dealings with Russian clients.

The same employee opined that this would likely be a bigger issue for crypto miners, who had spent “considerable amounts of money” on creating mining-related “infrastructure” in “various European and Asian locations” that enjoy access to low-cost energy.

The Financial Times, meanwhile, quoted the “former head” of an unnamed exchange as confirming that Japanese crypto exchanges had “encountered a recent intensification of pressure to relocate any mining or back-office operations out of Russia.”

But, the former executive added, “at least one exchange” has “decided to maintain its business” in Russia and was “skirting the regulation by setting up a shell company in Singapore and routing payments via that.”

The media outlet quoted the FSA representatives as responding by “renewing demands” that exchanges “cut any surviving relationships” with Russia, “people close to three exchanges” confirmed.

The US State Department was quoted as explaining that “Washington and its allies” were “united in our determination to hold Russia to account” for its actions in Ukraine, with a spokesperson stating:

“We will continue to evaluate the impacts of our measures and are prepared to take further measures.”

The media outlet also stated that it had contacted a number of Japanese exchanges, who variously claimed not to “have any operations in Russia.”

And an unnamed “senior” exchange “executive” was quoted as stating that they “knew of at least one mining company that had cut its relationships with Russia in June” at Washington’s request.

However, “people close to the situation” were quoted as saying that some Japanese exchanges and crypto miners had “evolved a complex network of subsidiaries to continue working with their Russian operations.”

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