International regulators have been urged by Japan's financial policymakers to treat cryptocurrency in the same manner as banking.
FSA deputy director-general Mamoru Yanase believes cryptocurrencies should be regulated.
“If you wish to implement effective regulation, you have to do the same as you regulate and supervise traditional institutions,” according to a report published on January 17.
Japan's financial watchdog took urgent action after FTX collapsed in November.
The issue was not caused by cryptography, unlike some of Yanase's American counterparts. “What’s brought about the latest scandal isn’t crypto technology itself,” he said, adding that the blame lies with “loose governance, lax internal controls, and the absence of regulation and supervision.”
US and European regulators have urged crypto exchanges to adhere to the same standards as banks and brokerages.
As a result of the recommendations, the Financial Stability Board, a global organization tasked with regulating the digital asset sector, has endorsed them.
Moreover, Yanase stated that countries must "firmly demand" that crypto exchanges implement consumer protection measures. Crypto brokerage firms were also required to comply with money laundering prevention, strong governance, internal controls, audits, and disclosures.
As part of his remarks, Yanase confirmed that FTX's Japanese subsidiary will resume withdrawals in February.
“We have been in close communication with FTX Japan,” said Yanase, explaining that the “client’s assets have been properly segregated” from the subsidiary.
A U.S. court presiding over the FTX case approved the sale of FTX Japan, among other subsidiaries of the company. An article last week stated that 41 parties were interested in purchasing the Japanese branch of the exchange. On January 16, Monex's CEO Oki Matsumoto indicated that the company was interested in purchasing FTX Japan. He added that a reduction in competition in the local market would be a "very good thing" for the company.