- The Japanese financial watchdog has urged countries to bring tougher rules for crypto.
- Demands have been forwarded to the Financial Stability Board.
- Recent events in crypto have highlighted the need for regulations.
There have been talks about regulating crypto from its inception, but the events of 2022 have strengthened the debate. Japan’s financial regulators have called for tougher rules and urged regulators to treat crypto similarly to banking.
Deputy Director-General of the Financial Services Agency’s Strategy Development and Management Bureau, Mamoru Yanase, feels the urgent need for control over crypto. Speaking with Bloomberg on January 17, 2023, he said:
“If you like to implement effective regulation, you have to do the same as you regulate and supervise traditional institutions.”
FTX implosion shook the crypto world to its foundations; hence, there is an acute need for regulatory actions. The comment from the financial watchdog of Japan comes after observing the scene.
Yanse acknowledged that this failure is not due to some fundamental problems in crypto but to loss of governance, absence of regulations and supervision, lenient internal controls, nobody looking over them, etc.
The United States and Europe’s regulators are also urged to enforce rules over crypto exchanges which are similar to brokerages and banks or traditional financial instruments and institutions in general.
These recommendations by a Japanese financial watchdog have been forwarded to a global organization tasked with regulating the digital asset industry, Financial Stability Board.
The general population interested in crypto adoption must come together and firmly demand the required consumer protection measures to be taken by a crypto exchange if they wish to operate in the country. Further demand could be for strong governance of the company, better internal controls, proper auditing and disclosure of crypto brokerages, and prevention against money laundering.
With the bankruptcy court working on the FTX case, FTX Japan customers can sigh relief as the withdrawals are supposed to resume in February 2023.
Yanase emphasized the nation’s close connection with FTX, and they have been in close communication with the officials, further confirming that the “client’s assets have been properly segregated.” Soon every victim would be paid back.
The court has agreed to the sale of FTX Japan and other subsidiaries that filed for bankruptcy on November 11, 2022. According to media reports, there are nearly 14 parties interested in buying the exchanges branch.
CEO of Monex, Oki Matsumoto, said about their interest in buying FTX Japan on January 16, 2023. They are glad that there shall be less competition.
The recent events have highlighted that though the technology is robust, the same cannot be said about the companies and people operating them. Hence every collapse or such event has been due to human error.
Moreover, when there is no governing body or no one is there to control or look over you, one tends to deviate from the path. Such regulation will not only push the companies to work in a better way but also help bring the lost trust back.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/01/17/treat-crypto-like-banks-japanese-regulators/