Claim Giveaway Token Proof of Reserve

Are We Indirectly Banning Crypto Because of FTX?

  • FTX debacle exacerbated investors to lose faith in the crypto market.

  • The daily trading volume saw a sharp decline after the FTX fallout.

  • The urgent need of an hour is global crypto regulation.


22-Nov-2022 By: Ashish Sarswat
Are We Indirectly Ba

They say, when it rains, it pours. That is certainly the sentiment 

Of much of the cryptocurrency community in the aftermath of FTX's collapse.

In the days that have followed, the crypto bank run that dragged down FTX and exposed all of its illegalities and mishandling of customers' funds has accelerated across the industry. Every centralized cryptocurrency exchange is experiencing record-breaking withdrawals, and more may fall.

The consequences of the enormous blowout at FTX are now just starting to become evident. The foremost concern that the fallout of the exchanges triggered is the safety of a user fund stored on an exchange. 

Following the FTX crisis, we saw multiple exchanges suspend withdrawals and regular operations, preventing users from accessing their own crypto assets. This begins to erode user trust in cryptocurrency, and several investors and individuals are also prohibiting cryptocurrency in the aftermath of the FTX debacle.

FTX Fallout Broke Investors Trust

As a result of the fallout, both the crypto market and user trust have experienced tremendous shockwaves. If we look at the past 24 hours' trading volume, it is $62 billion, which is significantly lower than the regular trading volume. The crisis shattered users' trust and ended up inflicting investors to distance themselves from cryptocurrency.

The crypto market soon has to recover the broken trust of the investors, or else the crypto market will suffer further in the future. The crypto market has two options for gaining user trust: the first is global crypto regulation, and the second is providing proper proof of reserves and regularly releasing audit reports.

However, as we noticed in recent days that several exchanges are falsifying their proof of reserves. As a result, this option is not reliable to restore investor confidence in the market. Then there is only one option left: global crypto regulation.

Crypto Regulation to Gain Investors' Trust

Experts and regulators all around the world are calling for stricter crypto regulation. The regulation will oversee how exchanges handle user funds as well as how the exchanges operate.

If global regulators are unwilling to undertake global crypto regulation, each country should enact appropriate crypto guidelines for registered crypto exchanges to regulate adequately under guidance. This, according to users and experts, might be the requirement of the hour.

What do you think? Will the market regain its investors' trust, or will it continue to lose it? Share your views in the comment section below.

Read also: Another Bankruptcy in Crypto Industry? Genesis Warns Bankruptcy!

WHAT'S YOUR OPINION?
Related News
Related Blogs