Ripple’s APAC policy director described FTX’s fall as “incredibly damaging” to the crypto space, but says the industry should stand the test of time if its focus shifts to creating a “true utility”.
In a statement sent to Cointelegraph, Ripple’s APAC Policy Officer Rahul Advani said he expects the FTX saga to lead to greater scrutiny of crypto regulations, while governments reassess “their stance on crypto and blockchain technology,” adding:
“FTX’s collapse is incredibly damaging to the crypto space and once again underscores the need for greater regulatory clarity.”
Advani argued that the industry will need forward-looking and “flexible” regulations to build trust in the crypto industry while protecting consumers.
“[These regulations] must include strong measures for consumer protection, but also recognize the different risks posed by business-facing crypto companies.
“What we don’t want to see is a knee-jerk response that could stifle innovation in the sector,” he added.
Following the collapse of FTX, a number of regulators around the world pledged to focus on developing greater crypto regulation.
The Australian government is stepping up its commitment to a crypto regulatory framework and the International Monetary Fund (IMF) has called for more regulation in Africa’s crypto markets, one of the fastest growing in the world.
Meanwhile, Summer Mersinger, commissioner of the US Commodity Futures Trading Commission (CFTC), said on November 18 that the time for action on crypto regulation may have arrived, prompting experts to warn that cryptography is in the crosshairs of US lawmakers.
Advani noted, however, that a “one size fits all” approach to regulation “won’t work” due to the different risk profiles exhibited by crypto companies. He instead advocated a “risk-based approach” to regulating the industry.
He added that the risks posed by crypto firms include conduct requirements, such as segregating corporate accounts, disclosing conflicts of interest, and providing “guarantees to retail investors.”
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“We still strongly believe that crypto is here to stay and real-world use cases will stand the test of time,” Advani said.
“I think the crypto industry will need to take a more focused approach, moving from cycles of hype to creating real utility.”