Ripple’s policy director for Asia Pacific says the collapse of FTX is exactly why crypto needs to move away from “hype cycles” to “real utility.”
Ripple’s policy director for Asia Pacific called the FTX fall “incredibly disruptive” to the crypto space, but says the industry must stand the test of time if its focus shifts to creating “true utility.”
In a statement sent to Cointelegraph, Ripple’s Asia Pacific Policy Officer Rahul Advani said he expects the FTX saga to lead to more scrutiny of cryptocurrency regulations while governments reevaluate “their stance on cryptocurrency and blockchain technology.” “, adding:
The collapse of FTX is causing huge damage to the cryptocurrency space and once again highlights the need for greater regulatory clarity.
Advani argued that the industry will need forward-looking and “flexible” regulations to build trust in the cryptocurrency industry and protect consumers.
[These regulations] should include robust measures to protect consumers, but also take into account the various risks associated with crypto-currency companies facing business.
“What we don’t want to see is a reflex reaction that could stifle innovation in this sector,” he added.
Since the collapse of FTX, a number of regulators around the world have vowed to focus on developing stricter cryptocurrency regulation.
The Australian government is stepping up its commitment to the regulatory framework for cryptocurrencies, and the International Monetary Fund (IMF) has called for increased regulation of African crypto markets, which are among the fastest growing in the world.
Meanwhile, Summer Mersinger, commissioner of the U.S. Commodity Futures Trading Commission (CFTC), said Nov. 18 that it might be time for action to regulate cryptocurrencies, prompting pundits to warn that cryptocurrencies are under the gun of U.S. lawmakers.
However, Advani noted that a one-size-fits-all approach to regulation “won’t work” due to the different risk profiles crypto companies exhibit. Instead, he advocated a “risk-based approach” to regulating the industry.
He added that the risks associated with the cryptocurrency business include behavioral requirements such as separating business accounts, disclosing conflicts of interest, and providing “guarantees to retail investors.”
“We remain a firm believer that cryptocurrency is here to stay and its real-world use cases will stand the test of time,” Advani said.
I think the cryptocurrency industry will need to take a more focused approach, moving from hype cycles to creating real utility.