Japanese regulators are calling for other countries to regulate cryptocurrency like banks, according to a report from Bloomberg on Jan. 16.
Mamoru Yanase, Deputy Director General for the strategy bureau at Japan’s Financial Services Agency (FSA), spoke to the news company. He said:
“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.”
Yanase went on to comment on the collapse of FTX. He asserted that cryptocurrency’s mere existence did not cause that event. Rather, he warned that “loose governance,” “lax internal controls,” and poor supervision led to the company’s massive scandal.
As such, he said that Japan’s FSA has begun to urge similar regulators in other countries — including the U.S. and Europe — to regulate cryptocurrency exchanges as thoroughly as they would regulate banks. He said that Japan has been advocating for global crypto regulation through its position within the international Financial Stability Board.
Yanase suggested that foreign regulators could demand new measures from crypto exchanges during the interview. One such measure could be on-site inspections to ensure that companies manage client assets correctly. He also suggested a “multi-national resolution mechanism” to help countries work together if large companies fail.
Despite such calls for regulation, Japan is often recognized as a reasonably crypto-friendly country. There are few regulations restricting cryptocurrency, and companies that wish to work with crypto are permitted to register as cryptocurrency exchanges.
The country is acting even more permissively in certain areas. Japan has recently announced plans to lift a ban on foreign stablecoins. It also funds the development of metaverse and NFT-related projects through government investments.
Some crypto companies are reducing their presence in Japan. Kraken and Coinbase both plan to end or greatly reduce operations in the country. However, that trend appears to be due to local market conditions rather than specific restrictions on crypto.