Japan Asks for Crypto to Be Controlled as Traditional Banks, Calls for Global Regulation of Sector

Japanese authorities have highlighted that the use of cryptocurrencies must be highly monitored and controlled.

Written by Radhika Parashar, Edited by Manas Mitul | Updated: 17 January 2023 13:58 IST

Japan Asks for Crypto to Be Controlled as Traditional Banks, Calls for Global Regulation of Sector

Photo Credit: Unsplash/ Roméo A

Indian finance minister Nirmala Sitharaman has called for a global support on crypto laws

Highlights

Japan is trying to take crypto-friendly approach
Previously, German regulators have also backed for global rules
Crypto industry could become safer with global laws

Japan, which is trying to take a calculated approach towards engaging with the crypto sector, has joined India in asking for a collective global outlook towards the digital assets industry. Japanese financial regulators have urged global regulatory bodies to finalise that the crypto sector should be monitored just as traditional banks are, across the globe. Essentially, Japanese authorities have highlighted that the use of cryptocurrencies must be highly controlled. Japan has blamed loose sector governance for the collapse of promising crypto projects like the FTX.

Mamoru Yanase, Japan's deputy director-general of the Financial Services Agency's Strategy Development and Management Bureau, asked other countries to think about immediate laws to regulate the global crypto industry.

“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,” a Bloomberg report quoted Yanase as saying.

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In the second half of 2022, over $200 billion (roughly Rs. 16,33,290 crore) was wiped off the global crypto market after promising projects like Terra and FTX collapsed due to liquidity crunches.

It is estimated that FTX users lost over a billion dollars in the dramatic downfall of the crypto exchange. As per Yanase, the crypto technology in itself is not to be blamed for these financial consequences that affected thousands of investors worldwide.

“It is loose governance, lax internal controls and the absence of regulation and supervision. What's brought about the latest scandal isn't crypto technology itself,” he noted.

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The Japanese authorities have suggested global financial regulators to mandate crypto firms to vouch for secure internal functioning, conduct regular audit of reserves, and disclose suspicious activities to the relevant authorities.

Back in July 2022, Indian finance minister Nirmala Sitharaman called for a global support on crypto regulations.

Currently, India is also presiding the G20 group of nations for a year. Under its leadership, India aims to formulate rules around crypto that would work on an international level.

The members of the G20 — including Argentina, Australia, Brazil, Canada, China, and France, among others — are already reviewing a draft of a legal framework around the crypto sector. Previously, German authorities have also urged for global rules to shape up the crypto sector, to ensure financial stability of all nations that are not banning the sector.

Will crypto tax hurt the industry in India? We discuss this on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

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Further reading: Cryptocurrency, Japan, Crypto Rules

Radhika Parashar

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Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More