During a funding pitch meeting, a millionaire millennial plays League of Legends while presenting his $30 billion cryptocurrency startup as a platform for doing anything with money. The VCs adore him, celebrities support him, and his employees sing his praises. He appears to be the gentleman who rescues faltering cryptocurrency platforms. There is, however, a twist in this fairy tale. His company’s rapid expansion causes his key crypto investor to feel scared. A traditional titanic confrontation escalates into a fight to the death. After several tweets, FTX files Chapter 11 The rise and collapse of FTX is reminiscent of a Hollywood script. The collapse was so rapid and thorough that almost one million clients were rendered helpless by it.
Industry experts debate whether or not this is cryptocurrency’s Lehman moment. Our minds kept replaying a terrible disaster. It’s not the first or last of its kind. Despite this, we keep playing poker. Once you enter crypto, be prepared for anything. Nothing is certain. They don’t know despite their claims. Speculation could cause catastrophic price volatility for cryptocurrencies without underlying assets. Bitcoin’s mystery is part of its appeal.
When we risk our life savings or a company’s assets, though, problems arise. Due to FTX, more businesses are struggling financially. Some fear bankruptcy. This group includes Web3 startups, hedge funds, celebrities, VCs, crypto traders, and a pension fund.
The bitcoin market is begging for regulation with its last breath. Otherwise, its self-implosion is inevitable. Large crypto market participants, like FTX and Binance, have urged regulation. It looks to be a hoax to deter law enforcement agents. The fact that Binance has evaded the attention of law enforcement organizations was a crucial factor in its eventual decision not to acquire FTX.
The digital asset market was supposed to stimulate Defi or decentralized finance, yet the reverse has occurred. The market centered on a small number of centralized exchanges that gathered disproportionate sums of capital, making them epicenters of calamity. In the words of journalist Joan Didion, the center will not hold. Therefore, the market for digital assets must be governed with the utmost rigor.
Expecting bitcoin to self-regulate is like asking gamblers to be careful. The former CEO’s risky bets caused FTX’s collapse. Crypto fans are crazy. Each failure justifies further restriction. Japan, the EU, Singapore, and Dubai regulate crypto, and many governments have oversight. Dubai established a Virtual Assets Regulatory Authority to govern the digital assets market outside of specific jurisdictions, such as the Dubai International Financial Centre (DIFC).
Governments scramble to regulate unethical cryptocurrency transactions. El Salvador’s legalization of Bitcoin has complicated regulations. Most countries don’t accept cryptocurrencies as cash but tax them as assets. Registration with local authorities, marketing restrictions, Know Your Customer regulations, and money laundering limits are emphasized.
Regulators must balance the free market with monitoring and decentralized and centralized platforms. Cryptocurrency market participants are well-informed. Many consider their involvement in crafting the legal framework a conflict of interest. US regulators are criticized for involving ex-FTX CEO Sam Bankman-Fried. US politicians were willing to oversee FTX’s US subsidiary, but not its Bahamas-based parent. Few understand the token laws of crypt assets, allowing potential disasters. Now they must change course.
We must prioritize consumer finances, strict accounting procedures, competent custodians, etc. Ripple Labs, the creator of XRP, has urged that authorities analyze crypto assets based on their risk profile. A strong regulatory framework requires knowledge of bitcoin exchanges and wallet services. We expect repeated meltdowns to push new legislation, notwithstanding their complexity.
Also Read: What is Dogecoin? (DOGE)
Binance and FTX’s disagreement has threatened the market. The bitcoin market should be severely regulated as if it were a century-old firm. Otherwise, it’ll destroy itself before others.