Fusang
Can and will the industry benefit from the collapse of FTX?
A $32 billion dollar company plunging into bankruptcy in less than a week, in any industry, is almost unheard of; much less against the backdrop of its CEO being the poster child of regulation has left. We asked Henry his opinion on the situation, his thoughts on the future of crypto vis a vis digital assets.
Transcript:
There's understandably a lot of fear right now in the crypto industry. People don't know who to trust, what platforms to use. But what I think is really important is to understand that none of this has been a failure of the underlying blockchain technology. It's a failure of people and platforms to do what they say they're going to do. And I'm actually really optimistic that all of this will lead into what I call crypto 2.0 where people start to use the underlying blockchain tech in the way it was meant to be used, and we start to operate as trusted platforms trading real assets.
(00:40):
Brokers versus exchanges. What's the difference? Brokers are there to help facilitate your trades, to help you make trades on exchanges, and we need them. Exchanges, on the other hand, they are the marketplace.They're there to provide a place for lots of different brokers to come together, match trades under a single governance framework and a single set of walls. And the issue with crypto today is that we have a lot of brokers pretending to be exchanges, where you think you are trading on some independent open marketplace, but you're actually trading directly against the broker.
(01:19):
Investors need to start asking the hard questions. These platforms in which you are doing business, are they licensed? Are they regulated? What kind of accountability do they have and to whom? And this is critically important because all of this provides a basic governance framework, making sure that platforms, for example, have financial accounts, they have audits, and ultimately making sure that you as an investor don't get the rug pulled from under you. Making sure that your money stays your money where it should be.
(01:55):
So when you as an investor have money on a platform, is it even still legally your money to be stolen by someone else? And to make sure that your money stays your money, you need to do three things. Number one, you need to make sure that platforms are holding this money for you and that ultimately this is still your money. Number two, you need to make sure that platforms are segregating your client monies from their own assets and they're clearly demarcated. And number three, you need to make sure that platforms don't have the right to do anything or use your money in any way that you haven't allowed them to.
(02:34):
So to cap it all off, investors need to start taking responsibility for asking the hard questions about their investments. When I buy a token, what is it? Does it have a fundamental value anchor or is it a security? When I do business with a platform, are they licensed? Are they regulated? On what basis are they holding my funds? But investors are the only ones who should be allowed to take risks with their money, with their investments. Platforms shouldn't be taking risks with client monies for them.
