Financial regulators in Japan are proposing that cryptocurrencies be regulated in the same way that traditional banking institutions are. The increased number of exchange failures in the blockchain industry has prompted the call for stricter crypto policies.
The Deputy Director General of Japan’s Financial Services Agency, Mamoru Yanase stated in an interview that cryptocurrency has grown too large to be operated without proper policies. Therefore, he added that crypto must be governed and supervised just like the banking sector for regulation to be effective.
Furthermore, Yanase highlighted that the collapse of the defunct FTX Exchange was caused by human factors such as lack of supervision, weak governance, and the absence of proper crypto guidelines, rather than the technology of crypto itself.
So far, other policymakers across the globe have recommended stricter policy measures in the blockchain industry to prevent future occurrences of exchange failures. For instance, the Thailand Securities and Exchange Commission (SEC) announced in November that it plans to enact stronger regulations on digital assets in an effort to protect investors’ assets.
Additionally, the call for tougher crypto regulations may also stem from concerns about the potential for blockchain technology to be used to circumvent existing regulations such as those related to securities and consumer protection.
The Japanese Blockchain Industry
Japan has been a leader in the adoption and regulation of blockchain technology. The Japanese government is actively supporting blockchain adoption in a number of sectors, including finance, supply chain management, and voting systems.
Yanase in his interview stated that the country is making its opinion heard across the globe through the Financial Stability Board and Japanese regulators are also urging other policymakers in other regions to enact crypto laws similar to those in the banking industry.
As relating to regulation, the Japanese Financial Services Agency (FSA) made an announcement that it would lift the ban on the domestic circulation of foreign-issued stablecoins such as Tether (USDT) and USDC this year. The goal is to make sure stablecoins can be used for payments as Japan looks to increase its presence in the Web3 ecosystem.
While the number of companies accepting bitcoin and other cryptocurrencies as means of payment has significantly increased across the nation, Kraken Exchange announced in December that it would cease operations in Japan for the second time due to the crippling crypto market.
