This week’s FTX collapse is “a tragedy and a total failure of governance,” Blockchain.com CEO and co-founder Peter Smith told CNBC’s “Closing Bell” on Thursday, but it will hurt the crypto economy.no way to sink.
According to Smith, the rapid demise of Sam Bankman-Fried’s company will accelerate a trend back toward regulated crypto institutions, as well as a shift back to individuals holding crypto assets on their own private keys.
“Crypto is one of the few assets in the world that you can manage yourself, and I think we’re going to see more and more people go back to that model and also to a model of trust in regulated companies in the space,” Smit said.
Smith said the general crypto and blockchain economies, and companies like him that rely on private funding, should not face major barriers in receiving money from investors.He said that despite all the hype – FTX was recently valued at a whopping $32 billion, though investors had cut it to zero this week – FTX was not a market leader or major player in the crypto ecosystem.It was, Smith says, very popular within Silicon Valley-based groups, which was confusing to him because investors were excited about the company with a very low level of governance.
The FTX situation will lead to more investors focusing on the corporate structure in crypto in the future.
“This was really a momentum game in Silicon Valley, and we’ve seen that very clearly didn’t work,” Smith said.
Some analysts have said crypto exchange Coinbase could be one of the companies benefiting from a greater focus on regulated entities.Brian Armstrong, CEO of Coinbasewho announced additional layoffs on Thursday, told CNBC on Thursday afternoon that the job losses were related to general market conditions and that costs and cash must be managed as a publicly traded company.
SEC Commissioner Gary Gensler told CNBC on Thursday that the American public should “be careful, beware.There is still a lot of non-compliance and if you give someone your token and they go down, you just get in line at a bankruptcy court and they can take your token and do all sorts of things without proper disclosure Now, if it’s one on one, and there’s really good disclosure, and your protection against fraud, tampering, that’s all we’re saying.what the securities laws are.”
In response to a question about Coinbase and Binance (the future acquirer of FTX), Gensler added: “I’m not going to talk to any platform, but I’d say you have these rules and the laws are clear, but don’t go for it.that these companies follow the rules and laws that follow the New York Stock Exchange or the largest brokerage apps.”
Armstrong pushed back in his interview, saying that as a publicly traded company, concerns about crypto custody are a “non-issue”.
“We hold clients’ money one-on-one,” he said.
As a publicly traded company, he added, it has audited financial statements by four major accounting firms.“What happened to FTX cannot happen at Coinbase, and we are a regulated institution in the US,” Armstrong said.
Blockchain.com, which came in at number 7 on CNBC’s 2022 Disruptor 50 list, is the company behind about a third of all bitcoin network transactions since 2012.
“The ultimate reality and the coolest thing about crypto is that you can store your money on your own private key, where you have no exposure to a counterparty,” Smith said.“And it’s been our mission for the past ten years to make that possible.”
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