Crypto Under Watch: Japan’s ACD Bill Raises Big Questions

Japan is already facing a storm of problems from over-tourism and inflation to a weakening yen and surprising rice shortages. But now, adding to this list is a controversial law that’s causing heated debate: the Active Cyber Defense (ACD) bill. If passed, this law could legalize peacetime monitoring of private communications companies, raising concerns for individual freedom and privacy.

What Is the Active Cyber Defense Bill?

The ACD bill proposes that Japanese state agents will be able to work with private communications and finance giants to collect information on possible cyber-attacks. Not only that, but it also allows the government to infiltrate servers labelled as suspicious and disable them. This would all happen under the approval of a newly formed third-party agency. While this may sound like a bold move to protect national security, the scope of the bill stretches across 15 key industries, including the financial sector.

Crypto Users: Here’s Why You Should Be Concerned

For cryptocurrency users in Japan, this could spell trouble. Domestic crypto exchanges and businesses are already under pressure from the Financial Services Agency (FSA) to register as custodians or partner with large exchanges. If the ACD bill becomes law, monitoring of crypto transactions will likely become even more aggressive under the guise of anti-money laundering (AML) and counter-terror financing (CFT) efforts. Past censorship events, like the ban on addresses linked to the ETH mixer Tornado Cash based on allegations involving North Korea’s “Lazarus” hacking group, show that governments won’t hesitate to crack down on crypto in the name of national security.

Government Assurances

Masaaki Taira, Japan’s Minister of Digital Transformation, insists that privacy will remain protected. He stated that the ACD law would “identify and respond to attacks more quickly and effectively,” and that secrecy of communications — guaranteed in Article 21 of the Japanese constitution will be “sufficiently prevented” from violation. However, trust in political assurances seems thin. Taira and Prime Minister Shigeru Ishiba have both publicly praised the governance styles of Donald Trump and Elon Musk. This adds fuel to concerns that these leaders may favor unilateral actions over careful democratic processes.

The Bigger Picture: More State Control, Less Freedom?

The possibility of the Japanese state monitoring private telecommunications and financial companies has set off alarm bells. For mainstream crypto users relying on centralized exchanges, this law could tighten the screws further. 

Even though cypherpunks who value privacy and peer-to-peer transactions might continue unaffected, the average user may face increased surveillance and restrictions. Censorship of blockchains is already happening worldwide, with coins like Tether and USDC being blacklisted in certain cases. Japan’s move seems to be part of a larger global pattern of increasing big-data government control, under the name of national security.

Final Thoughts

The ACD bill could reshape privacy and freedom in Japan, especially for those in the financial and crypto sectors. While it’s pitched as a defense against cyber-attacks, it could become a tool for state surveillance in everyday life. For now, all eyes are on the Japanese parliament, as crypto users and privacy advocates brace for what comes next.