Cryptocurrencies: Will They End Up After the FTX Scandal or Will Regulation Save Them? | Finance | Economie

The collapse of the FTX platform, whose founder, Sam Bankman Friedman, was arrested and charged with fraud and other crimes, is the latest episode of A dark year for cryptocurrencies and a shock wave threatens the future of the industry which calls for regulation as a means of survival. 2021 was a banner year for cryptocurrency.

(Read: FTX: widespread fraud and other accusations against its founder).

Bitcoin, the most popular, peaked at $69,000 and The total value of digital assets has reached $3 trillion Thanks to the ample liquidity that was present in the markets with the expansionary policies of central banks during the pandemic.

However, the panorama couldn’t be more different in 2022: Cryptocurrency crashed the financial markets And throughout the year, there were cases that undermined the credibility of these digital assets.

The crypto world is also new It helped fuel an upward spiral that is beginning to break the monetary tightening implemented by central banks since the first quarter to combat high inflation. The first crashes occurred in the spring with the collapse of TerraUSD, a digital asset that maintained its peg to the dollar through a complex algorithm tied to Luna (an unsupported cryptocurrency) that lost almost all of its value in five days.

Landing and spread Affected exchanges such as Celsius Network, In June, it stopped all transactions between clients, objected to the withdrawal of funds, and the following month declared bankruptcy. The last straw in the fall came with the $32,000 million bankruptcy of the FTX trading platform, a clear example of the lack of controls and supervisors in the sector for the experts EFE consulted.

Its founder, known in the past as the ‘King of Cryptocurrency’, is in jail in the Bahamas, the tax haven from which the platform operates, and is being sued by the US Department of Justice for fraud and money laundering, among other crimes. The scandal threatens Binance, the largest exchange in the sector.

(Also: Colombia’s cryptocurrency experiment is coming to an end.)

The lack of a regulatory framework is a key factor in explaining these events and its implementation will be a key factor in shaping the sector in the coming years. Julius Baer Director of Studies, Carsten Menke, believes that the crisis will delay the adoption of W Acceptance of cryptocurrency as a major investment assetWhile the arrival of a legal framework would instill confidence in digital assets, big questions remain after the FTX scandal.

Pointing in the same direction, Bit2Me spokesperson Javier Pastor is “convinced” that a regulated environment will enable the growth of the industry and the entry of institutional investors hoping to integrate bitcoin and other crypto assets into their portfolios.

Valencia International University (VUI) professor and industry expert, Alejandro San Nicolás Medina, predicts that: Despite the current situation, bitcoin will regain its momentum, and with it the entire cryptocurrency. Experts agree, drawing an analogy with the dot.com crisis and the internet outage at the beginning of the century: some cryptocurrencies and players will disappear, but many others will survive and shape the digital assets of the future.

(Keep reading: Three out of four people who bought bitcoin have lost their money.)

The overall balance by market value is bleak. after the events of spring, Bitcoin is down 67% from its all-time high It settled around $20,000 until FTX’s bankruptcy, sending the asset down to a yearly low of $15,485, levels not seen since November 2020.

Ethereum, the second most valuable cryptocurrency, suffered a similar fate and after touching $5,000 in November 2021, was trading on Friday at $1,200, 73% lower. experts They rule out cryptocurrency becoming a means of payment for now (With very few exceptions like El Salvador, where bitcoin is recognized as a monetary item) their utility will be as long-term stores of value.

This explanation gains more weight, according to Manki, in those institutions and countries that do not have high levels of corruption and inflation and that enjoy great confidence on the part of citizens. In these cases, point They must prove their usefulness to society and the economy if they are to prove themselves and be accepted.

Pastor (Bit2Me) asserts that bitcoin plays a “historic role” and that more and more citizens will understand the importance of hoarding wealth through crypto assets: out of reach of third parties and with a monetary problem defined by mathematics, without a central authority to back it up but sure.

For his part, San Nicolas sees that after reshaping the industry with more solvent and transparent companies, NFTs (from the English, non-fungible token), Bitcoin and Ethereum, the second most valuable cryptocurrency on which he is particularly focused, will, And a decentralized community, rooted in the ecosystem.

EFE