Mamoru Yanase – Deputy Director-General of Japan’s Financial Services Agency (FSA) – urged global watchdogs to impose tougher regulations on the cryptocurrency industry.
He believes digital asset exchanges should be treated the same way as banks.
According to Yanase, one way to prevent another collapse of a cryptocurrency platform is if regulators treat such entities as traditional financial institutions. The Japanese referred to the demise of FTX, saying its bankruptcy and alleged fraud committed by Sam Bankman-Fried have wrecked the entire blockchain sector.
On the other hand, he praised the actions of Japan’s monetary watchdogs that could allow local FTX users to withdraw funds by mid-February.
Yanase further argued that global regulators should protect consumers by enforcing more stringent anti-money laundering rules, applying enhanced governance on the crypto industry, and running internal auditing and control.
“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,” he said.
The FSA’s director also opined that regulatory authorities should establish a multi-national resolution mechanism that could be applied in a potential collapse of another giant crypto exchange. He thinks those nations and islands which are considered blockchain hubs should be the first to introduce that program.
The world’s largest cryptocurrency trading venue – Binance – sought a permit in September 2022 to operate in “the Land of the Rising Sun.” Its renewed interest (after leaving in 2018) comes as a result of the relaxed crypto laws which Prime Minister Fumio Kishida promised to enforce:
“Japanese Prime Minister Fumio Kishida’s agenda for reinvigorating the economy under the rubric of “New Capitalism” includes supporting the growth of so-called Web3 firms. The term “Web3″ refers to a vision of a decentralized internet built around blockchains, crypto’s underlying technology.”
Binance doubled down on its Japanese efforts in November by acquiring the Sakura Exchange BitCoin (SEBC). The latter operates as a cryptocurrency exchange and is registered with the FSA.
The US-based Kraken recently, on the other hand, announced intentions to leave the Japanese market, citing unstable economic conditions. The platform plans to deregister from the domestic financial regulator by the end of this month, while users’ deposits were halted on January 9:
“Current market conditions in Japan, in combination with a weak crypto market globally mean the resources needed to further grow our business in Japan aren’t justified at this time. As a result, Kraken will no longer service clients in Japan through Payward Asia.”
