Japan: Internal Affairs Minister Denies Involvement in Crypto-Related Gov’t Investigation

Japan’s Internal affairs minister Seiko Noda has denied her involvement in a government investigation into the operation of a non-registered cryptocurrency exchange, local news outlet the Asahi Shimbun reported July 19.

In January, the Financial Services Agency (FSA) reportedly suspected a Tokyo-based company of violating the law by operating a non-registered cryptocurrency exchange. The FSA requested a written response to its concerns from the company, arguing that it “did not respond by the deadline given, it would report the matter to investigating authorities and take necessary steps.”

The document obtained by the Asahi Shimbun reportedly revealed that several days after issuing the warning, Noda’s office contacted the FSA, asking for an explanation of what had happened.

The matter reportedly concerns a meeting Noda’s office held with the FSA regarding the alleged company in the presence of the company’s representative. Noda reportedly denied that she brought pressure upon the FSA investigation, telling the Asahi Shimbun that the purpose of the meeting was to get “an overall general account of cryptocurrency exchanges.”

Noda also argued that she had “no vested interest in the company in question” and the decision by her office to request the meeting “obviously does not amount to exerting pressure.” Noda pointed out that she did not present at the meeting.

According to the Asahi Shimbun, an FSA official visited Noda’s office on January 30 to explain the agency’s position toward the regulation of funds raising by issuing cryptocurrency to Noda’s aide and the company’s representative. A senior official at the FSA emphasized that Noda’s office request for a briefing could be recognized as pressure:

“A public servant will likely take it as pressure if an aide to a sitting Cabinet member calls for a meeting in which an employee of a company the agency is looking into is also present.”

Noda subsequently admitted that her aide presented at the meeting, and commented on the allegation, saying:

“My aide and the employee of the company know each other. Since we received a request for details of the regulations concerning cryptocurrency exchanges, we arranged [for a meeting with the agency]. I was not aware of the agency’s warning against the company.”

Yesterday, the Japanese government announced that, in the interest of better preparing the agency to address regulatory issues of the modern era, the FSA underwent an organizational reshuffling. The newly created Strategy Development and Management Bureau replaced the Inspection Bureau, and will will develop a financial strategy policy and handle issues addressing the digital currencies market, fintech, and money laundering.