Japan has reportedly urged other countries, including the United States, to regulate cryptocurrency exchanges in the same way banks do. A senior FSA official explained that his recent FTX implosion was not caused by cryptography, but by “loose governance, lax internal controls, and a lack of regulation and oversight.”
Bank-level cryptocurrency regulation
Japan’s top financial regulator, Japan’s Financial Services Agency (FSA), has called on regulators around the world to impose bank-level regulation on cryptocurrency exchanges, Bloomberg reported Monday. Mamoru Yanase, Deputy Director General of the Financial Services Agency’s Planning Bureau, said:
If we want to implement effective regulation, we must do the same thing that regulates and supervises traditional institutions.
The FSA has called for stronger crypto regulation following the collapse of crypto exchange FTX and subsequent fraud accusations against former CEO Sam Bankman-Fried (SBF). The FTX meltdown hit the cryptocurrency industry hard, highlighting regulatory gaps and differences around the world.
Japan’s strict regulatory framework for crypto assets has provided a means of protecting local investors. withdraw their funds From two Japanese crypto exchanges linked to FTX next month.
Commenting on FTX’s failure, Mr. Yanase said:
It’s not cryptography per se that this scandal has brought about…it’s lax governance, lax internal controls, and a lack of regulation and oversight.
According to Yanase, the FSA “started to urge” US, European and other financial agencies to impose the same level of oversight on cryptocurrency exchanges as on traditional financial institutions such as banks and securities firms. That’s what I mean.
Achieving regulatory coherence around the world, Yanase noted that countries may need to establish multinational resolution mechanisms to coordinate in the event of a large cryptocurrency company going bankrupt. emphasized the importance of
FSA officials say countries need to “firmly demand” cryptocurrency exchanges to ensure consumer protection, curb money laundering and implement robust governance, internal controls, audits and disclosures. There is,” he emphasized. Regulators should also have the power to take enforcement actions, such as on-site inspections, to ensure cryptocurrency companies are properly managing their customers’ assets, he added.
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