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Japan urges other countries to regulate crypto companies like banks

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Japan urges other countries to regulate crypto companies like banks

Japan urges other countries to regulate crypto companies like banks Mike Dalton · 11 hours ago · 2 min read

A top official says the U.S. and Europe should closely supervise crypto firms.

2 min read

Updated: January 17, 2023 at 2:26 am

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Cover art/illustration via CryptoSlate

Japanese regulators are calling for other countries to regulate cryptocurrency like banks, according to a report from Bloomberg on Jan. 16.

Mamoru Yanase, Deputy Director General for the strategy bureau at Japan’s Financial Services Agency (FSA), spoke to the news company. He said:

“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.”

Yanase went on to comment on the collapse of FTX. He asserted that cryptocurrency’s mere existence did not cause that event. Rather, he warned that “loose governance,” “lax internal controls,” and poor supervision led to the company’s massive scandal.

As such, he said that Japan’s FSA has begun to urge similar regulators in other countries — including the U.S. and Europe — to regulate cryptocurrency exchanges as thoroughly as they would regulate banks. He said that Japan has been advocating for global crypto regulation through its position within the international Financial Stability Board.

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Yanase suggested that foreign regulators could demand new measures from crypto exchanges during the interview. One such measure could be on-site inspections to ensure that companies manage client assets correctly. He also suggested a “multi-national resolution mechanism” to help countries work together if large companies fail.

Despite such calls for regulation, Japan is often recognized as a reasonably crypto-friendly country. There are few regulations restricting cryptocurrency, and companies that wish to work with crypto are permitted to register as cryptocurrency exchanges.

The country is acting even more permissively in certain areas. Japan has recently announced plans to lift a ban on foreign stablecoins. It also funds the development of metaverse and NFT-related projects through government investments.

Some crypto companies are reducing their presence in Japan. Kraken and Coinbase both plan to end or greatly reduce operations in the country. However, that trend appears to be due to local market conditions rather than specific restrictions on crypto.

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Silvergate Capital announces the suspension of Series A preferred stock dividends

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Silvergate Capital announces the suspension of Series A preferred stock dividends

Silvergate Capital announces the suspension of Series A preferred stock dividends Dorian Batycka · 11 hours ago · 2 min read

The move sent Silvergate Capital (SI) share price tumbling more than 10% today

2 min read

Updated: January 27, 2023 at 8:39 pm

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Cover art/illustration via CryptoSlate

Silvergate Capital, the parent company to the crypto bank Silvergate, has announced it will be suspending Series A preferred stock dividends as it hopes to restructure following heavy loses and FUD surroundings its exposure to several now defunct crypto entities. 

The company said Jan. 27 that it was doing so to maintain liquidity on its balance sheet, all the while navigating a series of exposures to several of crypto’s most toxic entities, including FTX and Genesis. 

CEO of Silvergate Capital Alan Lane said in a statement:

In response to the rapid changes in the digital asset industry during the fourth quarter, we took commensurate steps to ensure that we were maintaining cash liquidity in order to satisfy potential deposit outflows, and we currently maintain a cash position in excess of our digital asset related deposits.

Silvergate Capital Corp. is traded on the New York Stock Exchange under the ticker SI. The Silvergate bank, founded in a small California town in 1988, rose to prominence as the banker of choice for many now null crypto firms, including FTX, who had an estimated $1.2 billion worth of deposits held in the bank at the time of its collapse last November. While Genesis, the digital asset prime brokerage founded by Digital Currency Group CEO Barry Silbert, now insolvent, also had assets with the bank totaling $2.5 million, it was reported. 

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Compounding matters even further was a bank run that saw $8.1 billion worth of deposits withdrawn earlier this month in a decline of roughly 68%, forcing Silvergate to liquidate assets and lay off 40% of its staff. At the time, the company said there was a “crisis of confidence across the ecosystem.”

By the end of 2022, Silvergate said in a statement that they held more than $150 million worth of assets from customers who had filed for bankruptcy protection. 

After going public in 2019, shares of Silvergate rose to a high of $222 in November 2021, the same month, Bitcoin peaked at over $65,000 USD. Since then, Silvergate Capital shares have fallen to $12.68, more than 90% below their all-time high. 

Silvergate Capital share price as of Jan. 27 (source: Yahoo Finance)

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Ireland’s central bank leader calls for ban on crypto ads targeted at youth

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Ireland’s central bank leader calls for ban on crypto ads targeted at youth

Ireland’s central bank leader calls for ban on crypto ads targeted at youth Mike Dalton · 3 seconds ago · 1 min read

Gabriel Makhlouf says that ads aimed at young adults should be banned.

1 min read

Updated: January 26, 2023 at 1:45 am

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Cover art/illustration via CryptoSlate

The governor of Ireland’s central bank has called for legislators to ban crypto ads aimed at youth, according to a Reuters report dated Jan. 25.

Gabriel Makhlouf, Governor of the Central Bank of Ireland, said that a “reasonable number” of young adults had invested their money in cryptocurrency. He added that there is an “uncomfortable” amount of advertising targeting youth.

Makhlouf explicitly advocated for a ban before an Irish parliamentary committee, stating:

“If you could find a way, I would recommend that adverts to [the young adult] cohort are banned.”

He described most cryptocurrencies as a Ponzi scheme because other assets do not back many tokens. He then asserted that investing in cryptocurrency is “essentially gambling” and said that investment usually leads to loss.

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He also warned that upcoming EU legislation concerning stablecoins — backed by fiat currency — would not solve the issue. Reuters implied that Makhlouf was referring to MiCA regulations, which include rules for stablecoin issuers.

The Bank of Ireland and its executives have previously issued similar warnings. Makhlouf cautioned Bitcoin investors that they could lose money on their Bitcoin investments in 2021. The bank also issued another warning about crypto investment in March 2022, which included a warning about misleading cryptocurrency advertisements. The country has issued variations on these warnings that date back to at least 2018.

Despite its numerous warnings toward consumers, Ireland takes a somewhat permissive stance toward crypto companies. Gemini and Binance are among the companies that have gained regulatory approval to operate in the country in recent years.

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EU mandates banks to hold euro equivalent of crypto investments

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EU mandates banks to hold euro equivalent of crypto investments

EU mandates banks to hold euro equivalent of crypto investments Zeynep Geylan · 2 hours ago · 1 min read

The new bill was approved on Jan. 24 and will come into force January 2025.

1 min read

Updated: January 25, 2023 at 1:13 pm

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EU lawmakers passed a law Jan. 24 that mandates banks invested in crypto to hold the euro equivalent of their crypto investments as capital, Reuters reported.

The requirement will come into force in January 2025 to give banks enough time to adjust their finances, according to Reuters. The bill was approved with the purpose of eliminating the instability within the crypto sphere.

EU Parliamentarian Markus Ferber said:

“Banks will be required to hold a euro of their own capital for every euro they hold in crypto. Such prohibitive capital requirements will help prevent instability in the crypto world from spilling over into the financial system,”

According to the Association for Financial Markets in Europe (AFME), the new bill does not have a clear definition of what a crypto asset is. Therefore, it could be applied to tokenized securities as well.

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Since all EU states have approved the bill, lawmakers will start negotiating the final text with member states to finalize the official script.

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