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Japanese Lawmaker Seeks Token Clarity After FTX Meltdown

A Japanese lawmaker asked for more clarity on cryptocurrency regulation after an industry watchdog failed to alert consumers about the potential for problems around FTX’s native coin, FTT, when it approved the token for a listing earlier this year.

“It will become more and more important to ensure transparency for consumers when there are any matters that require attention on tokens,” Akihisa Shiozaki, a lawmaker with the ruling Liberal Democratic Party who helped design the nation’s crypto policy, said. He said that the FTX collapse shouldn’t undermine Japan’s relaxing of coin-listing rules. 

A regulatory body, Japan Virtual Currency Exchange Association (JVCEA), was formed in early March with the goal of developing and coordinating policies alongside the Financial Services Agency. 

In May, the Japanese Financial Supervisory Authority outlined the regulations governing registered exchanges, including stricter restrictions for the exchanges of anonymously traded altcoins. 

The industry’s regulatory body required the Japanese affiliate of FTX to audit the financial statements of the company’s subsidiary, Alameda Research, as a condition of approval, according to the document. 

The JVCEA reported back to the Financial Services Agency, which granted FTTs listing of the country’s domestic tokens, subject to certain conditions, according to a financial regulator in that country. 

The FSA has decided to enforce stricter supervision on new applications by exchanges hoping to obtain an official operating license.

Record-keeping, poor centralization controls, and a mix of customers’ assets from the massive holdings of FTTs between FTX and its Alameda Research trading firm were some of the reasons behind the collapse at FTX.

 FTX’s failed because of “problems in its governance as an exchange,”  said Shiozaki. “We need to think of that separately from the issue of how token vetting should be.”

Photo: Aleksandar Pasaric

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