The cryptocurrency world had one of its worst weeks in history with the collapse of Sam Bankman-Fried’s FTX. The once-beloved crypto mogul now faces scrutiny from all angles, which could result in criminal prosecution. Additionally, FTX’s fall has renewed calls from industry leaders for the US government to implement clearer regulations for cryptocurrency. Here’s what executives in the industry have said about further crypto regulations in the US after the crumbling of FTX.
Binance CEO Changpeng Zhao called for crypto regulations.
The whole controversy resulting in the bankruptcy of FTX started because of rival DeFi exchange Binance’s CEO Changpeng “CZ” Zhao. FTX collapsed within a week of CZ noticing its sister company, Alameda Research, invested heavily in FTX’s native token, FTT.
As a result of FTX’s bankruptcy, CZ said Binance would create an industry recovery fund to prevent further collateral damage. And, according to Reuters, at the B20 summit in Bali, Binance’s CEO called for additional crypto regulations. “We’re in a new industry, we’ve seen in the past week, things go crazy in the industry,” said Zhao. “We do need some regulations, we do need to do this properly, we do need to do this in a stable way.”
Additionally, Zhao said he feels the cryptocurrency industry has an inherent responsibility to protect consumers, though regulation is clearly necessary. And to achieve consumer protection, CZ announced he’s working with Ethereum co-founder Vitalik Buterin to develop a proof-of-reserves protocol. However, there are no details regarding this new protocol as of publication.
Coinbase CEO Brian Armstrong criticized regulator inaction.
Coinbase co-founder and CEO Brian Armstrong agreed that some crypto regulation is necessary in the wake of FTX’s collapse. However, in an interview with CNBC, Armstrong criticized unclear regulatory laws in the United States. He says that Coinbase has advocated for better crypto regulations in the country, but that’s not the point.
“FTX.com was not regulated by any US regulator; it was an off-shore exchange,” Armstrong said. “And the lack of regulatory clarity in the US is what drove US citizens and the trading volume to go off-shore.”
Armstrong continued by calling the crypto exchange’s bankruptcy an opportunity for the US to become a leader in crypto regulation. He said that, at the moment, the country is behind the curve on regulatory laws for the fledgling financial industry.