FTX chief executive Sam Bankman-Fried says that more stringent regulatory policy might be what prevents the next 2022-style crypto meltdown.
In a new interview on the FTX Podcast, the crypto billionaire says that while centralized digital asset firms like Three Arrows Capital or Celsius felt a lot of pain during the market downturn of this year, the decentralized finance (DeFi) space held up quite well.
He says DeFi’s on-chain transparency might have saved the digital asset subsector during the last crash and transparency stemming from regulatory oversight could be what prevents another collapse in the broader crypto markets.
“I think that one thing worth noting is when you look at the decentralized versions of these, they actually didn’t have big problems during the most recent crash and the reason is that there was transparency on a lot of assets that were backing which loans. And that helped a lot, and so I think having some regulatory oversight of the asset-to-loan ratios here would help make sure that these lending platforms are operating in a responsible manner.
I think some of these problems had been brewing for quite a while before they actually ultimately surfaced, and so I think that just having a bit of oversight and transparency I do think would actually go a pretty long way here towards helping.
Outside of that, I think just getting to a position as a space where there is regulatory clarity for those who are looking for it or whether there are clear ways to register products, will help a lot because right now, if it’s not even clear how to register, then you’re going to get a lot of unregulated products with no oversight.”
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