Crypto crash unlikely to dampen investor interest

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While the crash of cryptocurrency exchange FTX caused widespread alarm, institutional interest in crypto will remain strong long-term and the road to regulation will continue, industry players said.

“There is no doubt that what happened last month was a reputation killer for the industry,” said Jeffrey Howard, business development and institutional sales manager for North America at OSL, a Hong Kong-based digital asset trading platform.

While recent events will likely delay new buyers, for institutional investors already invested in crypto, “they continue to make new investments in their systems and in the market,” Miami-based Howard said.

According to Dario de Martino, a New York-based partner at Allen & Overy LLP and co-head of his blockchain and fintech practice, the bankruptcies of companies such as FTX and BlockFi were “predictable” due to “massive leverage in the crypto markets that have kind of built up over the years, and especially during bull markets.” He added that he doesn’t think recent events will affect “the kind of long-term outlook on blockchain and cryptocurrencies”.

But what is causing “chaos” for the industry is the lack of regulatory clarity, Mr de Martino said.

While the crypto world grapples with recent events, those on Capitol Hill have still not reached a consensus on how to regulate the industry. Congress has increased its interest in the issue, with the House Financial Services Committee, the Senate Agriculture Committee and the Senate Banking Committee all holding hearings on the FTX collapse in December.

“I’m afraid we see Sam Bankman-Fried as one big snake in a crypto garden of Eden. The fact is, crypto is a garden of snakes,” said Rep. Brad Sherman, D-California, chairman of the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets, at the House Financial Services Committee hearing on FTX.

The senses. Elizabeth Warren, D-Mass., and Roger Marshall, R-Kan., also introduced a bill in mid-December aimed at addressing the risks they say digital assets pose to states’ national security. -United. This includes extending the Bank Secrecy Act to the crypto industry, which would require crypto entities to follow anti-money laundering regulations that banks and other financial institutions are subject to.

“It’s time for Congress to force the crypto industry to follow the same money laundering rules as everyone else,” Warren said at the Senate Banking Committee’s FTX hearing.

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