As repercussions from the FTX collapse resonate across the cryptocurrency industry, there is a rising chorus from both crypto leaders and policymakers advocating for regulatory measures.
Within the past 24 hours, European Central Bank (ECB) President Christine Lagarde emphasized the critical need for regulation and oversight of crypto within the European Union. Meanwhile, Maxine Waters, Chair of the United States House Financial Services Committee, announced a planned investigation into the FTX collapse slated for December 13.
Notably, US Senator Cynthia Lummis, a crypto advocate, has referred to the FTX incident as a wake-up call for Congress. She highlighted that a bipartisan bill she had proposed earlier could have averted the collapse by enabling regulators to promptly detect any exchange falling below prescribed standards.
During a session at the Financial Times’ Crypto and Digital Assets Summit, Lummis underscored that such regulatory mechanisms could have triggered alerts, enforcement actions, and reviews by federal agencies if in place prior to the FTX downfall.
Speaking at a Binance Meetup in Nicosia, Binance CEO Changpeng Zhao expressed his belief that regulation is crucial for industry growth, consumer protection, and enforcing consequences on law violators to ensure orderly market operations.
Meanwhile, Stephanie Link, a chief investment strategist at Hightower Advisors, has demanded enhanced regulation, deeming crypto “broken and irrelevant” until a robust regulatory framework is established.
On a similar note, Tom Dunleavy, a senior research analyst from Messari, emphasized the necessity of clearer regulations for crypto to attract substantial investment flows and address the concerns of institutional investors regarding the uncertain regulatory landscape.
Citing the 2022 Institutional Investor Digital Assets Outlook Survey sponsored by Coinbase, Dunleavy highlighted that a significant portion of potential crypto investors are deterred by the lack of regulatory clarity.
In a recent note, JP Morgan underscored the urgency for implementing a consistent regulatory framework post-FTX collapse. The financial institution anticipates the adoption of regulatory standards from the traditional finance sector, indicating a potential convergence between the crypto ecosystem and traditional finance mechanisms.
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