Japan is calling on regulators worldwide to subject cryptocurrency exchanges to bank-level oversight. A Financial Services Agency top official explained that FTX's recent crash was not caused by cryptocurrency technology, but by “loose governance, lax internal controls, and the absence of regulation and supervision.”
The Japan Financial Services Agency (FSA), the country's top financial regulator, has urged regulators around the world to subject cryptocurrency exchanges to bank-level regulation, Bloomberg reported Monday (via bitcoin.com). Mamoru Yanase, deputy director-general of the FSA's Strategy Development and Management Bureau, was quoted as saying:
“If you like to implement effective regulation, you have to do the same as you regulate and supervise traditional institutions.”
The FSA has called for stricter regulation of cryptocurrencies in the wake of the collapse of cryptocurrency exchange FTX and subsequent fraud allegations leveled against its former CEO Sam Bankman-Fried (SBF). The collapse of FTX dealt a severe blow to the cryptocurrency industry and highlighted the need to take clear and concerted action to regulate.
Japan has a tough regulatory framework for crypto assets, which has provided some protection for local investors. They are expected to be able to withdraw their funds from two FTX-linked Japanese crypto exchanges next month. Commenting on the collapse of FTX, 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.”
According to Yanase, the FSA has begun urging its counterparts in the US, Europe, and other regions to subject cryptocurrency exchanges to the same level of scrutiny that traditional financial institutions such as banks and brokerages are subjected to. He noted that countries may need to create a multinational agreed resolution mechanism to coordinate actions in the event of bankruptcy of large crypto firms, which will work around the world.
Yanase emphasized that countries “need to firmly demand” the adoption of measures from crypto exchanges to ensure consumer protection, curb money laundering, and implement robust governance, internal controls, auditing, and disclosures. He added that regulators should also have the authority to take enforcement actions, such as onsite inspections, to ensure that crypto firms are adequately managing clients’ assets.
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Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.