The cryptocurrency industry has had a tough few weeks, with the conviction of FTX founder Sam Bankman-Fried for fraud making the headlines. The fallout from the FTX debacle is far from over, as customers are awaiting the return of their funds and the company’s bankruptcy advisers have sued another crypto exchange for close to $1 billion.
Adding to the industry’s woes, OneCoin’s compliance chief pleaded guilty to charges of fraud and money-laundering. Celsius Networks, a crypto firm once accused of fraud, has emerged from bankruptcy and is offering customers only 67 cents on the dollar for their deposits.
Although it’s a seemingly bleak picture, there may be a silver lining in the cloud. In what can be seen as a major move to bring the crypto industry in line with traditional financial systems, Binance, the world’s largest crypto exchange, agreed to a $4.3 billion settlement for violating money-laundering laws and sanctions. This may open the doors to increased regulation to curb the rampant misuse of the industry.
Further illustrating the trend towards increased regulation and institutionalization, Tom Farley, the former President of the New York Stock Exchange, has purchased CoinDesk and is demonstrating interest in acquiring FTX.
Even as these legal battles unfold, the industry continues to expand. BlackRock, the world’s largest money manager, is making moves towards launching a fund that holds Ethereum. Meanwhile, some FTX alumni are planning to launch a new crypto exchange, further diversifying the landscape.
Let’s not forget the regulatory aspect either. While the hardships have been real, they also point to the need for firm regulatory controls. The Binance deal emphasizes the fact that existing laws can handle some of the cryptocurrency industry’s issues. Regards to this, Tom Emmer, a Republican in the House, has expressed that the deal shows no new crypto-specific legislation is required.
Yes, these are challenging times for the crypto industry, but they may, in fact, be just what is needed to push the industry towards regularisation and mainstream acceptance.