Japanese police now want to track cryptocurrency transactions. This comes after several instances of cryptocurrency-based crime and an increase in the use of cryptocurrencies for money-laundering. Japan’s National Police Agency published that it may launch a crypto-tracking software to trace all the digital currency transactions in the country.
Japan’s Push for Cryptocurrency Legitimacy
According to NHK, the country’s public broadcasting organization, the special software is a full-funded effort from the NPA to prevent illegal crypto trades. Historically, Japan has been liberal in regard to cryptocurrencies and was the first major economy to recognize Bitcoin as a legal tender. However, the onslaught of criminal activities and hacks is causing the country to introduce stricter rules. Dash, Zcash and Monero are currently banned from trading in Japan, due to security concerns. These companies are banned due to their anonymous features which make it really difficult to trace a user’s transaction history.
The new software reportedly costs over $315,000 (~35 million yen) per year to maintain. The NPA is seeking a comparable increase in the department’s security budget for the next fiscal year.
Reverse Tracing Suspicious Accounts
Police forces will extract suspicious transactional data with the help of sophisticated software. Additionally, this is then compared to exchange records to track a user’s identity. The country requires KYC regulations to enable buying and selling, which will prove helpful. An undisclosed, private tech company is behind the software.
Crypto-security concerns remain at a high in Japan, however. In August, Tokyo-based cybersecurity firm Trend Micro found Bitcoin ATM malware was available online for a relatively cheap price. One could obtain the malware and a ready-to-use card with near-field communication feature. Moreover, this enables scammers to receive the equivalent of 6,750 euros, dollars or pounds in BTC.
Meanwhile, Toshihide Endo, commissioner of Japan’s Financial Services Agency, stated the crypto ecosystem needs to find a “balance” between technological innovation and consumer protection for gaining prominence. He added there is “no intention” to curb the rising industry. But instead intends to define a robust regulatory framework before widespread adoption.