Japan, which is trying to take a calculated approach to working with the crypto sector, has joined India in calling for a collective global outlook on the digital assets industry. Japan’s financial regulators have urged global regulators to finalize that the crypto sector should be monitored in the same way as traditional banks around the world. In essence, the Japanese authorities have emphasized that the use of cryptocurrencies must be heavily controlled. Japan has blamed loose sector governance for the collapse of promising crypto projects like FTX.
Mamoru Yanase, Japan’s deputy director-general of the Financial Services Agency’s strategy development and management office, urged other countries to consider immediate legislation to regulate the global crypto industry.
“Crypto has gotten so big. If you want to implement effective regulation, you have to do the same as you regulate and monitor traditional institutions”, a Bloomberg report quoted Yanase as saying.
In the second half of 2022, over US$200 billion (approximately Rs. 16,33,290 crore) was wiped out following promising projects like the global crypto market Terra and FTX collapsed due to liquidity shortages.
It is estimated that FTX user Lost over $1 billion in crypto exchange’s dramatic downfall. According to Yanase, crypto technology itself is not responsible for these financial consequences, which have affected thousands of investors worldwide.
“It’s loose governance, lax internal controls and a lack of regulation and oversight. What led to the recent scandal is not the crypto technology itself,” he noted.
Japanese authorities have proposed to hire the global financial regulators crypto companies to vouch for secure internal operations, conduct regular audits of reserves and report suspicious activity to the relevant authorities.
India Finance Minister as early as July 2022 Nirmala Sitharaman demanded a global support on crypto regulations.
Currently, India also holds the presidency G20 group of the nations for a year. Under his leadership, India wants to formulate rules around crypto that would work on an international scale.
The members of the G20 – including Argentina, Australia, Brazil, Canada, China and France, among others – are already considering a draft Legal framework around the crypto sector. Previously, German authorities have also pushed for global rules to shape the crypto sector to ensure the financial stability of all nations that do not ban the sector.
