Japan is advocating for regulators worldwide to enforce regulations on cryptocurrencies in the same manner as they do for banks, following the failure of digital-asset exchange FTX owned by Sam Bankman-Fried.
Mamoru Yanase, deputy director-general of the Financial Services Agency’s Strategy Development and Management Bureau, stated,
If you like to implement effective regulation, you have to do the same as you regulate and supervise traditional institutions.
Japan’s financial regulator has made statements in response to the failure of FTX in November, which has led to increased calls for regulatory measures in the industry. It is estimated that FTX users lost over a billion dollars in the collapse of the crypto exchange.
The regulations in place in Japan have protected investors, and they are expected to be able to withdraw their funds from FTX’s local subsidiary in the coming month.
Unlike some regulators in the United States, Yanase recognizes that the issue is not with cryptocurrency itself. “What’s brought about the latest scandal isn’t crypto technology itself,” he stated, adding that the problem is with loose governance, inadequate internal controls, and a lack of regulation and oversight.
He has urged regulators in the U.S. and Europe to apply the same regulations for crypto exchanges as they do for banks and brokerages.
The Japanese government has recommended that global financial regulators require crypto companies to verify their internal security measures, regularly audit their reserves, and report suspicious activities to the appropriate authorities. These recommendations have been advanced through the Financial Stability Board, a global organization responsible for regulating the digital asset industry.
While confirming that the Japanese subsidiary of FTX is expected to allow withdrawals to begin again in February, Yanase said that the agency has been in close communication with FTX Japan and that customers’ assets have been separated from the subsidiary. The court overseeing the FTX case in the U.S. approved the sale of FTX Japan and other company subsidiaries. There were 41 potential buyers for the Japanese branch of the exchange.
