Bloomberg reported Monday that Japan’s Financial Services Agency, the country’s top financial regulator has asked global regulators to apply bank-level regulations to cryptocurrency exchanges. Mamoru Yanase was quoted as saying the following:

You must implement effective regulation if you want to supervise and regulate traditional institutions.

Following the fall of cryptocurrency exchange FTX, and subsequent fraud charges against its former CEO Sam Bankman Fried (SBF), the FSA called for stronger crypto regulation. The cryptocurrency industry has suffered a serious blow from the FTX collapse, which highlighted gaps and differences in regulation around the world.

Local investors have been protected by Japan’s strict regulatory framework for crypto assets. They are expected to be able to withdraw their funds from two Japanese crypto exchanges that are linked to FTX.

Yanase commented on the failure to FTX:

The latest scandal is not crypto technology. It’s loose governance, lax controls, and the absence supervision and regulation.

Yanase claims that the FSA has “began to urge” their counterparts in Europe, America, and other countries to apply the same level of supervision to cryptocurrency exchanges as traditional financial institutions such as banks and brokerages.

Yanase noted that some countries might need to create a multilateral resolution mechanism in order to coordinate when large crypto companies fail. He also stressed the importance to have consistency across regulations.

Officials from the FSA stressed that countries must ‘firmly demand’ crypto exchanges implement strong governance, internal controls and auditing, as well as disclosures. This will ensure consumer protection and curb money laundering. To ensure that crypto firms are properly managing their clients’ assets, he said that regulators should have the power to enforce such actions as onsite inspections.