After the bankruptcy of FTX, the question of trust arises for the entire crypto world.
(Photo: Reuters)
How long do you think it will be before the saga about Sam Bankman-Fried, founder of the collapsed crypto exchange FTX, is made into a film? The affair has everything that a blockbuster needs, tragedy, guilt, height of fall, and then the whole thing also takes place in exotic locations.
In record time, the young protagonist with the dark curly hair mutated from cryptoguru to gravedigger of the former boom industry, 17 billion dollars in investor funds have disappeared after the spectacular bankruptcy, and last week Bankman-Fried was arrested on suspicion of fraud in his adopted country, the Bahamas. The only question that remains is which Hollywood studio will secure the contract for the story of the rise and fall of SBF, as the FTX founder is called in the scene.
For the crypto industry, completely different – existential – questions arise. Will Bitcoin & Co. survive the scandal that shook trust in the entire scene? Or will the artificial currencies wither bleakly in some dark niche of the financial world in the future? The answer crucially depends on how tightly the crypto ecosystem will be regulated going forward, and there are two opposing schools of thought.
The world of cryptocurrencies is artificially inflated, inherently unstable and full of risks, so it should not even be legitimized by regulators or financial companies because it gives investors a false sense of security, says for example Ulrich Bindseil, Director General at the European Central Bank. Mark Branson, head of the German financial regulator Bafin, calls for the opposite: strict global regulation.
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To make it short – the Bafin boss is right: The crypto industry needs concise and internationally uniform rules. Not just to protect consumers and the rest of the financial world, but also out of self-interest. An unregulated ecosystem would only have a chance if it were so small that accidents like the collapse of FTX and the collateral damage it caused remained so manageable that there was no risk of contagion for the (regulated) rest of the financial world.
>> Read here: “Amateur, infantile” – Bafin boss calls for comprehensive regulation of the crypto sector
Such an isolated, anarchist niche would, by definition, be irrelevant to the larger picture of international capital markets. But that would benefit neither the crypto industry nor the rest of the financial world.
Trading volume on crypto exchanges has halved
Quite apart from the fact that such dark, isolated biotopes in the otherwise fairly well-lit financial world offer money launderers and other criminals an ideal habitat. For this reason alone, it is clear that the crypto scene needs to be regulated more tightly.
The loss of trust as a result of the FTX scandal should actually also show the protagonists of the crypto scene that their innovations threaten to fizzle out without effect if the industry does not grow up as quickly as possible. And that includes regulation.
FTX founder Sam Bankman-Fried agrees to extradition to the United States
The past few days have shown how quickly things can slide towards insignificance. If you believe the data from the information service Bloomberg, then the trading volume on crypto exchanges such as FTX has roughly halved since the collapse in mid-November. If this continues at this rate, Hollywood might not be interested in the SBF story after all, and that would actually be a shame.
More: European subsidiary of FTX is for sale