This week FTX collapse it’s “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’s not going to sink the crypto economy in any way.
According to Smith, the quick drop from Sam Bankman-Fried’s company will accelerate a trend toward regulated crypto institutions, as well as a shift toward individuals holding crypto assets in their own private keys.
“Crypto is one of the few assets in the world that you can custody yourself, and I think we’ll see people increasingly return to that model, as well as a model of trust in regulated companies in the space.” Smith said.
Smith said that the crypto and blockchain economies in general, and companies like his that rely on private funding, shouldn’t face any major hurdles in receiving money from investors. He said that despite all the hype, FTX was recently valued at up to $32 billion, although investors had I marked it down to zero this week: FTX was neither a market leader nor a key player in the crypto ecosystem. Smith says it was very popular with Silicon Valley-based groups, which confused him, as investors were enthusiastic about the company that had very low levels of governance.
The FTX situation will make more investors focus on the corporate structure of cryptocurrencies in the future.
“This was very much a Silicon Valley push play, and we’ve clearly seen that it didn’t work,” Smith said.
Some analysts have said that cryptocurrency exchange Coinbase could be among the companies that would benefit from a increased focus on regulated entities. Brian Armstrong, CEO of base of coinswhich announced additional layoffs Thursday, told CNBC Thursday afternoon that the relatively small number of job cuts was related to general market conditions and the need to manage costs and cash as a public company.
SEC Commissioner Gary Gensler told CNBC Thursday that the American public needs to “be careful, be careful. bankruptcy and they may be taking your token and doing all sorts of things without proper disclosure now if it’s one to one, and there’s really good disclosure, and its protection against fraud, manipulation, that’s all we’re saying That’s what the securities laws are.”
In response to a question about Coinbase and Binance (the potential acquirer of FTX), Gensler added: “I’m not going to talk to any particular platform, but I would say that you have these rules and the laws are clear, but don’t assume that these firms comply. with the rules and laws that the New York Stock Exchange or the larger brokerage applications abide by.”
Armstrong responded in his interview, saying that as a public company, crypto custody concerns are “not an issue.”
“We keep client funds backed one by one,” he said. As a public company, he added, it has financial statements audited by the big four accounting firms. “What happened to FTX cannot possibly happen to Coinbase, and we are a regulated institution in the United States,” Armstrong said.
Blockchain.com, which entered No. 7 on CNBC’s 2022 Disruptor 50 ListIt is the company behind about a third of all bitcoin network transactions since 2012.
“The ultimate reality and the best part of crypto is that you can store your funds in your own private key where you have no exposure to the counterparty,” Smith said. “And it’s been our mission to enable that for the last decade.”
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