Ripple’s APAC Policy Director has described the fall of FTX as “incredibly damaging” for the crypto space, but says the industry should stand the test of time if its focus shifts towards building “real utility.”
In a statement sent to Cointelegraph, Ripple’s APAC policy lead Rahul Advani said he expects the FTX saga to lead to greater scrutiny on crypto regulations, while governments will re-evaluate “their stance towards crypto and blockchain technology,” adding:
“The collapse of FTX is incredibly damaging for 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 boost confidence in the crypto sector while protecting consumers.
“[These regulations] must include robust 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 within 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 doubling down on its commitment to a crypto regulatory framework and the International Monetary Fund (IMF) called for more regulation in Africa’s crypto markets, one of the fastest-growing in the world.
Meanwhile, United States Commodity Futures Trading Commission (CFTC) commissioner Summer Mersinger said on Nov. 18 that the time to act on crypto regulation may have arrived, prompting experts to warn that crypto is in the crosshairs of U.S. lawmakers.
Advani however noted that a “one size fits all” approach to regulation “will not work” due to differing risk profiles presented by crypto companies. He instead advocated for a “risk-based approach” to regulating the industry.
He added that risks posed by crypto businesses include requirements on conduct, like segregating business accounts, disclosing conflicts of interest, and providing “retail investor safeguards.”
Related: After FTX: Defi can go mainstream if it overcomes its flaws
“We still firmly believe that crypto is here to stay and that real use cases will withstand the test of time,” Advani said.
“I think that the crypto industry will have to take a more focused approach, shifting from hype cycles toward building real utility.”