Cardano cryptocurrency and its network users are under scrutiny after The Kanto Shinetsu National Taxation Bureau discovered ¥1.4 billion (US$12 million) worth of missing crypto taxes. This was brought to light after a large-scale audit was conducted in the Kanto region.
The ADA investors are now under investigation following the issue, according to a report by Nikkei Asia. These include individuals living in the cities of Saitama, Tochigi, Gunma, Niigata and Nagano.
Japan has long struggled in imposing effective regulations to govern peer-to-peer (P2P) crypto transactions and recently tightened regulations amidst the tax debt.
Most of Japan’s P2P transactions have bypassed the regulations since they do not normally go through the local exchanges in the country. However, these personal transactions make up a large portion of crypto trading activities in Japan, according to Nikkei Asia.
‘It’s difficult to identify who holds or is receiving cryptocurrencies unless there is a professional exchange involved, meaning criminal organizations can exploit personal transactions,’ Kazuyuki Shiba, a representative of Japan’s Institute for International Monetary Affairs, said.
Chainalysis, a blockchain research company, showed data about crypto transactions of real-world criminal organisations. These groups engage in illegal activities and transfer funds between multiple accounts to obscure the digital footprint of the transactions.
Experts have said before that criminals can exploit crypto trading since it does not require proof of identification. This led to the recommendation of an international anti-money laundering group named The Financial Action Task Force that crypto exchanges should share client data with one another.
Japan’s tax bureau has made it a priority to report liabilities from crypto investments since 2017 amidst the regulation that all exchange platforms need to register with the Financial Services Agency.
However, these don’t account for personal data transfers. The rules regarding that are pending approval from the Japanese government.
Amidst the crackdowns of Japan’s neighbouring countries including China and South Korea, the pressure is building for the Japanese government to impose better tools for tracking illicit activities in the crypto sphere and incorporate these on the regulatory framework of the industry.
Recently, the Chinese government has ultimately banned cryptocurrency trading in the country amidst money laundering issues and energy conservation efforts. Moreover, South Korea has issued crackdowns on local exchanges to divulge customer information to local banks in order to continue their operations.
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