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Japanese financial regulators are now calling for tougher regulations for the crypto sector. They are urging regulators worldwide to treat crypto the same way they do their respective banking sectors.
Deputy director-general of the Financial Services Agency’s Strategy Development and Management Bureau, Mamoru Yanase, stressed the need to properly regulate the crypto sectors considering its rapid growth in recent years.
“Crypto has become this big,” Yanase told Bloomberg in an interview. “If you like to implement effective regulation, you have to do the same as you regulate and supervise traditional institutions.”
The comments from Japan’s regulators come in the wake of FTX’s bankruptcy in November, which highlighted the urgency of regulatory action, according to Cointelegraph. Thankfully for FTX Japan’s investors, the country’s rules have helped shield them from the parent firm’s collapse. In fact, FTX Japan is set to resume withdrawals next month.
FTX’s bankruptcy and fraud charges against Bankman-Fried have battered the crypto sector, highlighting gaps and differences in global digital-asset regulation. Japan’s rules have helped to shield investors, who are poised to be able to withdraw their funds from FTX’s local subsidiary next month.
Yanase acknowledged that the problem was not with crypto itself, unlike some of his counterparts in the U.S. “What’s brought about the latest scandal isn’t crypto technology itself,” he said. “It is loose governance, lax internal controls and the absence of regulation and supervision.”
Japan’s regulators have been urging their counterparts in Europe and the U.S. to enforce similar rules and the same level of supervision for crypto exchanges as they do for banks and brokerage. The recommendations were done through the Financial Stability Board, an international organization working on global regulation of crypto asset activities.
Yanase said that countries should “firmly demand” consumer protection measures from crypto exchanges operating in their respective jurisdictions. They should also require measures for money laundering prevention, adequate internal controls, strong governance, and disclosure for crypto brokerages.
