Regulators in Japan have advised global policymakers to regard cryptocurrencies like banks as well as tighten the regulation around the asset class just the way it is done with traditional financial investments. It is believed that the nascent crypto industry has expanded to a level where it should receive the same coordinated regulatory procedure as other financial institutions.
According to the deputy director-general of the Financial Services Agency’s Strategy Development and Management Bureau Mamoru Yanase,
“Crypto has become this big. If you like to implement effective regulation, you have to do the same as you regulate and supervise traditional institutions.”
Global Call for Regulation After FTX Implosion
Speaking of the FTX implosion which happened last year, Yanase said;
“What’s brought about the latest scandal isn’t crypto technology itself. It is loose governance, lax internal controls and the absence of regulation and supervision.”
Therefore, there is a call to policymakers in the United States, Europe, and other jurisdictions to take crypto supervision and regulation more seriously.
The FTX implosion and bankruptcy proceedings served as an eye-opener for several entities including regulators, and investors. Sam Bankman-Fried, the former Chief Executive Officer (CEO) of the Bahamian-headquartered crypto exchange was accused of mishandling customers’ deposits and was eventually charged with about eight counts, all to which he pleaded not guilty in a New York court.
Some other regions where FTX operates were affected severely like in the case of FTX Bahamas which filed for Chapter 15 bankruptcy. Unlike these regions, FTX Japan plans to allow customers access to their funds as of February this year. FTX Japanese users were saved by legislation that requires crypto exchanges to keep clients’ funds separate from their assets.
In the end, the loopholes and vulnerabilities in the crypto industry were exposed as well as the gap in the regulation sector. Japan regulators’ call for a global regulatory framework is in synchronization with the practices that some regions are currently imbibing. Australia is working on launching a strict crypto regulatory framework which it believes will bring stability to the industry.
United States President Joe Biden has also made a critical call for regulation in the digital asset industry.