FTX collapse a ‘mini GFC’, but no death knell for crypto


That bull market exuberance that you mentioned, do you think is partially at the center of all these crashes that we’ve seen this year? Did companies stretch themselves too thin when times were good?

Yes. I saw firsthand what happened in Ireland when people thought the good times would never end. And they did, they stopped dead. And I don’t condemn people for their choices: it’s a normal human thing to be excited about the good times you’re experiencing.

I think what was missing, maybe within the crypto ecosystem, was enough experience and voices saying that it won’t always be like this, that things go up and down. I think that is a reflection of the relative youth of the sector. But even then, I don’t think anyone would have expected what happened in the last week or so.

But I’ve been very vocal about the need for regulation, and right now, we have an industry that understands the need for protection when it comes to the segregation of client assets and proper custody solutions. We know it’s a good way to go, and last year’s Senate report suggested so.

So we have an industry that is willing to do it. You have a Senate recommending it. But now we’re in November 2022, a year after that report, and we haven’t really gotten enough traction.

Is that lack of progress frustrating?

I don’t know if it’s frustration because I understand that we have had to change governments since then and there is a lot to understand from a regulatory point of view.

But instead of trying to regulate products and assets, we should be trying to regulate bad behavior. I think that is what the industry 100% supports because what happened with FTX was not a problem with cryptocurrencies, it was behavior.

Do you think the FTX crash will have a major negative effect on crypto as a whole, especially institutional trust?

No, and the reason I say no with a high degree of certainty is because this isn’t a problem with bitcoin, it’s a problem with behavior. What I think we will see after this is an escalation in regulatory talks in Australia, the US and the UK. Therefore, institutional interest will remain, although it may calm down at least until the new year.

I doubt this is the death knell for crypto that so many outsiders have predicted.

What I hope we see is more than just amplification around the bitcoin price, instead we see an amplification of stories around the use of technology. I think that’s where the change will come from, and I think it’s a critical narrative change that the industry needs to survive.

Does it change the type of crypto assets I could list as an exchange?

Well, we were ready to launch Solana last Friday, and then obviously the wheels fell off of FTX, which was very closely related to Solana. So we’ve stopped the launch until the smoke clears and we can see where we are.

We’ve got a few other releases in the works, and there’s still plenty of appetite for new listings, but it’s safe to say that the due diligence will be incredibly thorough.


As someone who worked through GFC, does it feel like a GFC moment for crypto?

Maybe a mini one, in the sense that there are bigger exchanges out there than FTX, and a lot of them have been doing the right thing, so this was more of a warning.

I don’t blame investors feeling very down over the course of this week and anxious about the future. That is a normal human reaction. But I doubt this is the death knell for crypto that so many outsiders have predicted.

After the FTX collapse, many of the major international exchanges have been publishing their proofs of reserves and having them audited. Should Australian exchanges do the same?

Yes, and I think it should be on both sides of the ledger, both active and passive. Certainly in the short term having that degree of transparency would be helpful, but I don’t know how helpful it is in the long term. When I check into a bank, I don’t normally go and look at their balance.

I think that when an appropriate regulation is introduced that requires exchanges to provide financial information to the regulator, I think that will serve the needs in the long run.

But for us as an exchange, we’re actively looking at methods that we can use to test our reserves, and we have a couple of different options. Therefore, we hope to publish it as quickly as possible so that clients can appreciate that their assets are safe and supported by our platform.

Given the turmoil of the past week, what do you think this will mean for cryptocurrencies in the coming months?

I would expect that certainly in Australia we will continue to campaign for regulation. We need to have the proper protections here to take care of investors in this asset class. And that doesn’t mean regulating it out of existence and making people have to go to foreign exchanges to buy crypto. That’s just passing the buck.

We have to get it right here in Australia, to make sure we have these protections and also to properly develop the industry.

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