By
Steve Muchoki
April 24th, 2024
The FTX bankruptcy has surprised many investors with fears of possible unexpected centralized crypto exchange collapse.
The FTX and Alameda’s implosion has pricked global regulators, and ECB president Christine Lagarde now calls for further crypto scrutiny.
Lagarde Calls for Crypto Regulations
While responding to questions from EU parliament representatives who are significantly concerned with the crypto market following the FTX collapse, Lagarde said the “stability and reliability” of crypto had been exposed. Moreover, over $450 million was stolen from FTX a night before filing for chapter 11 bankruptcy, which has been regarded as an inside job. As a result, about 1 million crypto traders and investors have been stranded as the court proceedings drag along.
Notably, European Union member States formally endorsed the final text of the Markets in Crypto Assets (MiCA) regulation – the EU’s comprehensive framework to regulate the issuance and servicing of most crypto assets – on October 5, 2022. With the enforcement of the MiCA regulations expected by the end of this year, Lagarde has indicated that there has to be a MiCA II.
Furthermore, the cryptocurrency market is in the early stages of development, with many operational changes expected along the way. As such, a second version of the EU regulatory framework to encompass the evolving trends in the crypto market is prudent, according to Lagarde.
Future of Crypto Market Post FTX Implosion
The FTX bankruptcy has surprised many investors with fears of possible unexpected centralized crypto exchange collapse. According to our latest crypto price oracles, the total crypto market cap stands at around $870 billion, down over $2.2 trillion in the past twelve months. While the possibility of further decline is probably due to the effects of FTX and Alameda, the cryptocurrency market is well poised for significant recovery as more regulations come in.
The European Union is readying to roll out a CBDC with a reliable digital payment infrastructure. “We have to be able to offer that, otherwise, somebody else will take that place,” Lagarde said.
Global regulators are closely working with cryptocurrency companies to regulate the industry altogether. Recently, Binance CEO Changpeng Zhao (CZ) noted that a crypto organization to work with regulators is crucial for global adoption.
As a result, more scrutiny of crypto firms’ licenses will be conducted, particularly on centralized exchanges like Coinbase Global and Binance.
Lagarde has been the president of the European Central Bank since 2019 and has significantly steered the organization toward digital payment services. As such, the crypto market is expected to thrive, but market strategists forecast a more extended winter.
With over 300 million people reportedly using Bitcoin and altcoins for fast and affordable cross-border payments, governments will continue to support the crypto market with the proper regulations.