A hotly debated set of “active cyber defense” (ACD) bills hit the floor of the Japanese parliament Wednesday (JST), which would legalize peacetime spying on private communications companies. The industries in which preemptive snooping would apply include financial companies, opening the door for further crackdown on the free use of cryptocurrency.
Adding to the formidable tsunami of issues currently facing Japan — rampant overtourism, inflation, a weak yen, and bizarre rice shortages — is a looming law that would legalize peacetime monitoring of private communications.
If finally approved, the “Active Cyber Defense” bill would see the Japanese state engage with private communications and finance giants (among other companies in various industries) to gather information that may be related to cyber-attacks. The bills would then allow state agents to preemptively infiltrate so-called suspect servers via the approval of a new third-party agency and disable them.
Crypto could be affected, DX minister assures privacy won’t be violated
Masaaki Taira, Japan’s “Minister of Digital Transformation” (DX) noted on March 19 at a house of representatives cabinet committee, that the infringement of “secrecy of communications” laws stipulated in Article 21 of the country’s constitution, will be “sufficiently prevented.” Taira claims the ACD law would “identify and respond to attacks more quickly and effectively.”
However, the flimsy assurances of politicians aren’t enough reassurance for some, who see only further encroachment on the freedom of the Japanese people. The active cyber defense bill, pushed hard by PM Shigeru Ishiba, aims to put Japan in line with US and European-style cyber-defense policies, as both Taira and Ishiba openly praise the unilateral governance styles of Trump and his unelected partner Elon Musk. Monitoring of private telecom giants is concerning enough, but the financial industry is also included in the scope of the bill. Private companies in 15 key industries could be affected if the ACD comes into force.
The law would also affect the operations of domestic cryptocurrency exchanges and businesses, already under pressure from the Financial Services Agency (FSA) to either register as crypto custodians or potentially partner with major exchanges as supervisors. As such, under the new ACD laws, free crypto exchange would take another legal blow, as monitoring of transactions and communications for the purposes of so-called anti-money laundering (AML) and anti-terror (CFT) measures would undoubtedly increase further.
Indeed, censorship of various blockchains in the name of national security is already ongoing, and has happened in the past, with examples such as Tether, USDC, and previously addresses linked to the ETH crypto mixer Tornado Cash. In the case of Tornado Cash, since overturned sanctions mentioned the so-called North Korean hacking syndicate “Lazarus” as an excuse for censoring cryptocurrency transactions.
So, while Japan’s ACD spy laws may not affect those foundational cypherpunks who still adhere to the necessity of the separation of money and state and purely peer-to-peer (P2P) transactions and self-custody their coins while using privacy protocols, mainstream crypto users on centralized exchanges could find themselves under even more stringent scrutiny from Japan’s new big-data government.
Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now
