Akihisa Shiozaki, a lawmaker with the ruling Liberal Democratic Party, has expressed disappointment with regulators for approving the listing of FTX’s native token, FTT, on exchanges in the country.
Shiozaki noted that the failure to conduct due diligence led to losses of thousands of Japanese investors as the token’s value tumbled overnight in the wake of FTX’s collapse. Things began to fall apart when it was revealed that the bulk of Alameda Research’s balance sheet consisted primarily of FTT tokens, which is considered a major financial anomaly.
The reaction of the markets was swift as Binance, and other entities began unloading their FTT holdings, leading to the implosion of the exchange and the decline of asset values.
“It will become more and more important to ensure transparency for consumers when there are any matters that require attention on tokens,” said Shiozaki.
He added that this black swan event should not impede Japan’s progress in the virtual currency industry by imposing stiffer listing requirements. The country’s regulators have hinted that it was on course to relax its listing rules as part of efforts to embrace digital assets.
The Japan Virtual and Crypto Assets Exchange Association (JVCEA), a self-regulating entity made up of the leading local exchanges, granted only a conditional listing of FTT. A document circulating in Japan’s cyberspace indicates that the JVCEA had ordered FTX’s subsidiary in the country to monitor Alameda Research’s FTT holding before issuing unconditional approval for listing.
JVCEA has come under fire for its failure to disclose the information to the public, but the regulator claimed that it informed the Financial Services Agency after the conditional approval for FTT’s listing.
The fallout from FTX’s collapse
FTX’s collapse sent shockwaves through the ‘cryptoverse’ as it sent regulators into a frenzy. Investors are bracing themselves for harsher regulations stemming from the need for regulators to prevent a repeat of the incident.
It is widely expected that the JVCEA’s plan to relax listing rules will be abandoned in Japan. New data revealed Japan was amongst the hardest hit in FTX’s implosion, but it appears that customers could receive their assets independent of bankruptcy proceedings.
“We have put together a plan for the resumption of withdrawal service, which has been shared with and approved by the new FTX Trading management team. Development work for this plan has already started and our engineering teams are working to allow FTX Japan users to withdraw their funds,” FTX Japan said.
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