FTX's downfall affected the whole cryptocurrency sector. The second-largest bitcoin exchange collapsed, wiping almost $200 billion in a week.
The CEO and co-founder of a significant Japanese cryptocurrency exchange, bitFlyer Inc., Yuzo Kano, referred to it as the "Lehman shock" to the sector. Yuzo thinks that the failure of FTX could spread like a virus and cause the failure of further businesses.
The entire cryptocurrency sector has been affected by the FTX collapse. More than $200 billion was lost from the cryptocurrency market in a week when the second-largest crypto exchange went under.
The CEO and co-founder of a significant Japanese cryptocurrency exchange, bitFlyer Inc., Yuzo Kano, referred to it as the "Lehman shock" to the sector. Yuzo thinks that the failure of FTX could spread like a virus and cause the failure of further businesses.
We have observed that the FTX crisis has already caused crypto lending behemoths like BlockFi to suspend withdrawals at their end. Another cryptocurrency lender, Salt, has suspended deposits and withdrawals, citing the impact of the FTX collapse on their business.
A global recession was caused by Lehman Brothers' 2008 collapse, which rippled across the entire banking sector. The CEO of bitFlyer anticipates a catastrophe comparable to the FTX crisis in the cryptocurrency industry.
The Financial Services Agency (FCA), according to Yuzo Kano, has successfully created a second layer of supervision, which she also praised as a strength of the regulatory system in Japan. This guarantees that consumers are better protected.
Regulation, in my opinion, is crucial, Yuno stated. Japan may be followed by other countries in stepping up regulatory monitoring of digital assets. Additionally, he suggested that regulations be established so that cryptocurrency exchanges can manage clients' funds independently of their own. He added that bitFlyer had no association whatsoever with the FTX. The decline so has "absolutely no impact" on the Japanese exchange.
Cryptocurrency Financial Crisis
Not just the CEO of bitFlyer has drawn comparisons to the collapse of Lehman Brothers. Changpeng Zhao, the CEO of Binance, previously compared it to the financial crisis of 2008 and predicted that it would take some time for the industry to recover. He stated:
That analogy is probably appropriate, in my opinion. It is disastrous for the industry when an incident of this nature occurs. A great deal of consumer trust is damaged, and I believe that this essentially takes us back a few years. We will see cascade impacts if FTX fails. They will suffer, especially for those who are close to the FTX environment.
The CEO of Binance also urged the creation of universal cryptocurrency standards to stop similar incidents from happening again.
