Does the crypto industry need rebooting?

Highlights

• FTX has to be one of the biggest names to fall in 2022 thus far.
• Godfrey John Bewicke-Copley, a member of the House of Lords, emphasized that the crypto industry needs to work with regulators and should consider rebooting the system.

The FTX fiasco has left the crypto market red-faced. In fact, the year 2022 can well be dubbed as a year of implosions, with the likes of Voyager Digital, Celsius, and 3AC all falling like a heap of cards. But FTX has to be one of the biggest names to fall in 2022 thus far. At the start of 2022, the Bahamas-based exchange had boasted a US$32 billion valuation and roped in celebs such as Larry David and Tom Brady.

But come November, following a possible merger with Binance collapse, FTX filed for bankruptcy after a week. FTX founder Sam Bankman-Fried was accused of diverting customer deposits to FTX-owned Alameda Research. Market participants withdrew nearly US$6 billion in just 72 hours.

This has got all the politicians and regulators deliberating what needs to be the future of cryptos and how they can control such slides.

Ditch crypto?

The debate has been started on whether they should ditch the word crypto altogether. Ask Godfrey John Bewicke-Copley, a House of Lords member, and he will tell you it would be better not to term cryptocurrency anymore. He further emphasized that the crypto industry needs to work with regulators and should consider rebooting the system.

At an All-Party Parliamentary Group (APPG) meeting on 30 November, Bewicke-Copley further delved into the challenges with the current crypto market sector. He elaborated that its time for the Financial Conduct Authority (FCA) to deal with crypto crimes.

UK's Economic Secretary Andrew Griffith somewhat echoed his views. Griffith highlighted that even though the current crypto market scenario doesn't paint a rosy picture, it would be foolish to turn a blind eye towards it.

MiCA rule implementation is a need of the hour

Similarly, European Securities and Markets Authority (ESMA) Risk Analysis & Economics Department Head Steffen Kern voiced his opinion on the need to ensure the Markets in Crypto-Assets Regulation (MiCA) legislation gets implemented soon as possible.

Kern suggested that the MiCA bill aims to tackle critical issues such as investor protection and set important rules for market participants. MiCA bill will come to force in 2024 and aims to provide rules and regulations for crypto operations in European Union.

Conclusion

All in all, the FTX episode has been an eye-opener, considering the number of crypto firms going bust this year. Besides, it has also given fuel to the regulators to push for more stringent laws to ensure that such a thing can be controlled in the near future. 

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