According to an EY executive, the crypto winter no longer significantly affects long-term industry growth.
For the first time ever, according to EY’s global blockchain head, price fluctuations in cryptocurrencies do not significantly affect the industry’s long-term growth. However, he insisted that “it is equally crucial that authorities crack down on blatant Ponzi schemes sooner and more severely.”
The global blockchain head at EY, Paul Brody, spoke about the crypto winter, the need for regulation, and the demise of cryptocurrency exchange FTX in an interview that was published by the Mint newspaper on Thursday.
He was asked if he thought the current crypto winter will soon end. He retorted, “This is a much milder crypto winter than the last one. One of the main characteristics of current winter is the decoupling between the price of crypto assets and the effort being done in the crypto business to develop products and engineering. The executive from EY stated:
Price fluctuations no longer significantly affect the industry’s long-term growth for the first time in history. From the industry’s purely financial concentration, we are gradually moving away.
The creation of applications, non-fungible tokens (NFTs), and decentralized autonomous organizations are now much more the focus of the Ethereum ecosystem, he continued (DAOs).
Brody on the Need for Crypto Regulation and the FTX Collapse
The EY executive also spoke on the demise of FTX, a cryptocurrency exchange that some have likened to Ponzi schemes like the infamous one ran by Bernie Madoff.
In response to a query on users’ trustworthiness of crypto exchanges in the wake of the FTX crisis, he issued a warning: “The premise behind crypto was that it is entirely transparent since it is on the blockchain and you can see if something horrible happened. That theory was false. Just because you can see data doesn’t guarantee you can comprehend the intricate data flow in smart contracts.
Without strong regulatory control, entities that have attempted to combine on-chain and off-chain financial activities are struggling, according to Brody.
The EY blockchain leader cautioned that it has been impossible to determine whether your assets are just being stored and utilized for you or if they are also being pledged and used in other circumstances. The most important lesson learned is that good governance must be either easy for individuals to follow or carefully audited and publicly traded.
Additionally, he stressed the necessity for more stringent regulations, saying:
It is crucial that authorities take swifter and more severe action against blatant Ponzi schemes. I want to see more regulation and guidelines that smart players can abide by.
Many people have urged authorities in numerous jurisdictions to bolster their monitoring in the wake of the collapse of FTX. The FTX crash, according to Bank of England Deputy Governor for Financial Stability Sir Jon Cunliffe, has highlighted the urgent need for stricter regulation. Appropriate crypto oversight has been demanded by the White House and numerous US legislators. Recent calls for the Securities and Exchange Commission (SEC) to act swiftly to regulate the cryptocurrency industry came from U.S. lawmakers.