After the FTX debacle, the experts and users are calling for strict crypto regulations.
New FTX CEO also dubbed this event a regulatory failure.
The global crypto market needs immediate crypto regulations to regain users' trust.
the safety of users' funds.
After discovering that FTX was mismanaging its user funds, users' and investors' trust started to fade toward the crypto market and exchanges.
A few weeks ago, FTX was the fourth largest centralized crypto exchange, and this type of activity led the exchange to lose its position and raised concerns about the viability of centralization in the crypto market.
In addition, the "King of Crypto," aka Sam BankMan-Fried, owner of FTX, which is well known as a savior of the crypto market during the Terra Luna collapse, has engaged in such amusing activities. Also, following several regulatory investigations into FTX, the SBF went missing as well.
This indicates that there is an urgent need for strict crypto regulation to govern the crypto market and exchanges and prevent such events from occurring.
What kind of regulations do we actually need?
The primary reason why individuals and experts are calling for crypto regulation is security concerns. As we can see, this was not the first time when users were prohibited from accessing their own holding; exchanges have previously halted user withdrawals.
As a result, the regulation must include proper guidelines for user funds management. The guidelines should also allow users to withdraw their holdings during a bear market or crypto crisis.
The regulations will also mandate exchanges to release proof of reserves on a monthly basis, which will increase user confidence in the crypto sector. Furthermore, exchanges must be audited properly and the report will be made accessible to the public as well.
These are some of the urgent necessities for crypto regulation. However, only time will tell what kinds of regulations governments enact to prevent such events from occurring in the future.
Conclusion
The breakdowns of Terra Luna and FTX have raised serious concerns about the lack of crypto regulation. However, no one took the Terra event seriously at that time, and as a result, we witnessed the FTX fallout.
But one thing to be noted here is, not only experts call it a regulatory failure, but new FTX CEO— John Ray has also cited the incident as a regulatory failure.
These events are the sole reasons for extending crypto winter even further. If governments fail to adopt a crypto regulation this time, we will undoubtedly witness similar events in the future.
What do you think will governments enact a crypto regulation this time? Share your views in the comment section below.
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