Is this the end of crypto?
An observation of the post-FTX crypto world
The crypto market is going through a bit of a rough patch at the moment. Bitcoin, the biggest giant of the crypto world, has been seeing a constant price dip that has carried onto the new year with other coins following suit. The bankruptcy of the major cryptocurrency platform FTX has caused a massive fallout in this evolving financial industry. The bankruptcy proceeded to be nightmarish, wiping out 9 Billion USD worth of crypto investments and involving novel issues of law and multiple challenges to achieving an accurate accounting of the underlying facts.
US Senator Elizabeth Warren said the FTX collapse “shows crypto may be more integrated into the banking system than regulators are aware”.
JP Morgan chief executive Jamie Dimon called digital tokens “Decentralized Ponzi Schemes” during an interview with the Fox Business Network. According to him, after the collapse of the FTX, a lot of people got hurt by crypto and most of them were retirees, grandmothers, and lower-income folks.
Coinbase Global, a crypto exchange, has also announced that it will be making changes to its team and cutting costs to streamline operations, resulting in layoffs for about 20% of its staff members. The company is reducing expenses by 25% in the current quarter and around 950 employees will be affected by this. This is not unique to Coinbase as other companies in the cryptocurrency industry have also announced similar changes.
Ensuring Consumer Protection
The Biden administration is urging Congress to create stricter regulations for the cryptocurrency industry, following the collapse of FTX. Experts believe the lack of regulations may have contributed to the bankruptcy, highlighting the need for stronger oversight in the crypto market for the protection of consumers and for the growth of the industry.
Thomas Gorman, partner at the international law firm Dorsey & Whitney and former senior counsel in the SEC’s Division of enforcement, says the lack of cryptocurrency market regulation opened the door for the FTX collapse.
“Now is the time to stop being wowed by notions such as blockchain, smart contracts, defi, and others that are invented daily, it’s time to create rules for crypto so that the assets are properly regulated.” Gorman says. “Otherwise, the difficulties will continue.”
New crypto ventures
Despite grim circumstances, entrepreneurs are working hard in 2023 to make sure their ideas keep moving forward in the dynamic cryptocurrency market. Beacon, a web 3 focused early stage accelerator program was launched last year, and its flagship cohort just graduated. They are partnering with 13 exciting new crypto startups to showcase their products and services on demo days.
The Venom Foundation, a blockchain firm, and Iceberg Capital Ltd, an Abu Dhabi-based investment manager, have launched Venom Ventures Fund (VVF), a $1 billion crypto venture fund. But that's not all, they're also taking the lead on a $20 million funding round for the virtual world platform, Numi Metaverse.
A silver lining for FTX?
One piece of good news for the FTX investors is the recovery of over 5 Billion USD in cash or in crypto assets recently, which will help them to repay their creditors. FTX's advisers have discovered that over 9 million customer accounts and 120 billion transactions were handled on the platform before it was shut down. Although it is not yet clear how much creditors will receive or the percentage of their debt that will be repaid, it's a promising sign for those affected by the bankruptcy.
Final thoughts
The last year has been tough on the crypto market, to say the least, with a downturn in prices and increased talk of regulations. However, many in the industry remain optimistic and new ventures continue to emerge. The crypto industry is still a volatile, ever-evolving field, and it's important to stay informed and cautious.