The turbulent aftermath of FTX after the explosion has spread to all corners of the industry over time.
At the moment of the FTX thunderstorm, the users of the FTX platform were the first to be bombarded. There is no specific statistics on how many users FTX has. However, according to the data, FTX’s market share in June 2022 is about 24%, ranking second in the industry, and its website visits are about 5.76 million times per week (including FTX US).
Behind such a large amount of data are millions of users from all over the world. The impact of these users is undoubtedly a huge blow to the industry, so that the trust of all users in the industry has been shaken.
Under the panic, the crisis of trust in the centralized exchange came. Cryptocurrency balances on centralized exchanges (CEXs) have fallen to their lowest levels since November 2018, data shows.
In just one week from November 6th to November 13th, users across the industry netted $3.7 billion worth of Bitcoin and $2.5 billion worth of Ethereum, and more than $2 billion in stablecoins were also withdrawn from centralized exchanges. withdrawn.
The crisis of trust in the exchange is just the tip of the iceberg, and no one can survive the avalanche alone.
When the entire market is in a state of extreme panic, the stampede effect born of panic also appears. Investors sold mainstream currencies such as Bitcoin and Ethereum sharply, causing the market to plummet. In addition to investor selling, Bitcoin also encountered the largest single-day selling pressure from miners since January 2021.
According to the data, in November 2022, the average hash price of Bitcoin will reach $0.05. Bitcoin’s current price of $16,500 makes mining unprofitable not only for small miners, but also for large miners, while Bitcoin miners and hedge funds who use loans to overleverage at the same time Facing bankruptcy crisis.
Compared with market turmoil, the crypton market is facing more stringent scrutiny from countries around the world.
Market turmoil can be smoothed over time for the industry, but it is difficult for various countries to change their attitudes towards the crypto market in a short time.
With the passage of time, the aftermath of the FTX thunderstorm has been perceived by governments around the world, and the crypto market, which was already difficult to be accepted by governments, has encountered a policy winter.
United States – legislative regulation is imminent
Compared with other countries, the United States has higher requirements for cryptocurrency exchanges to operate in the United States, so the exchanges operating in the United States have special US versions, such as FTX US and Binance US. Compared with As they are, they all have relatively high requirements and a sound margin mechanism.
This is a relatively harmonious situation at present, and it will never return after the FTX thunderstorm. After the thunderstorm, the White House of the United States said: “It will continue to monitor the development of cryptocurrencies, and believes that cryptocurrencies may harm ordinary Americans without proper supervision.”
The statement of the White House of the United States is undoubtedly a clear-cut expression of the attitude of the US government authorities towards cryptocurrencies. After that, the statements of various functional departments in the United States also followed.
In an interview, Gary Gensler, chairman of the US Securities and Exchange Commission (SEC), directly stated that cryptocurrency is an obviously non-compliant field. He believes that only by allowing exchanges to register under US regulatory policies and implementing strong law enforcement Complete the protection of investors.
U.S. Treasury Secretary Janet Yellen expressed the attitude of the U.S. government more clearly than the chairman of the U.S. SEC. She said that cryptocurrency regulation has always been the focus of the Biden administration. Industry is regulated.
It can be seen that both the U.S. Treasury Secretary Yellen and the Biden administration have always been vigilant against cryptocurrencies. This FTX thunderstorm has made it more urgent for the U.S. authorities to regulate cryptocurrencies. There are of course many reasons, but the most important thing is that as the cryptocurrency market continues to expand, more and more traditional financial institutions will join this field and become more closely connected with this industry. When the traditional financial system is more closely connected with the crypto market, and the FTX thunderstorm incident occurs again, it is likely to pose a broader threat to financial stability, which may have a huge impact across the country and the world. Stable things are absolutely intolerable.
This is why Yellen has been emphasizing regulation, strengthening regulation, and strictly implementing regulation, and calling on Congress to step in and fill the regulatory gap.
U.S. Treasury Secretary Yellen is not the only one who is concerned about the impact of the crypto market on traditional finance. Michael Barkin, vice chairman of the Federal Reserve Supervision, also made relevant statements in some talks about FTX. Barkin believes that the systemic risk of crypto-related activities has not arisen. But proper guardrails need to be put in place for banks working in the crypto industry.
In addition, Federal Reserve Vice Chairman Brainard also expressed his views. He believes that the crypto industry is highly centralized and interconnected, rather than decentralized, and that cryptocurrencies need to be subject to regulatory licenses.
Judging from the voices of various representatives of the Federal Reserve, the Federal Reserve’s attitude towards cryptocurrencies is also very obvious. The Fed doesn’t care what will happen in the field of cryptocurrencies. What they care about is that cryptocurrencies should not affect the stability of the traditional financial system.
So when will the U.S. regulatory policy on cryptocurrencies come? There is no doubt that FTX has become the biggest driving force for the implementation of U.S. policy regulation. Rostin Behnam, chairman of the U.S. Commodity Futures Trading Commission (CFTC), even publicly stated that the crypto crisis is “enough to push Congress to act.”
However, judging from the current market information, the regulatory policy on stablecoins should be the first to be implemented, because U.S. lawmakers generally believe that stablecoins may be a regulatory method that they can initially deal with. For example, U.S. Senator Sen. Said that he hopes to promote the hearing of the Stablecoin regulatory bill jointly submitted by him and Senators Patrick Toomey and Cynthia Lummis in the next few weeks.
South Korea – multi-pronged approach to vigorous and resolute
South Korea is the country with the largest proportion of people participating in cryptocurrency in the world. The incident of Three Arrows Capital has had a great impact on South Korean society. The FTX thunderstorm once again had a profound impact on South Korea. According to statistical data, Korean users account for more than 6% of FTX users, which is the country with the highest proportion of users in FTX’s countable area. Roughly calculated, the number of Korean users affected by FTX this time may exceed that brought by Sanjian Capital influences.
A large number of public participation has made the South Korean government have a very high regulatory response to the crypto market. After the FTX incident, the Financial Intelligence Unit (FIU) under the Korean Financial Services Commission immediately conducted a risk investigation on 40 virtual asset providers in South Korea to prevent a second FTX incident.
Concurrent with the risk investigation, Korea’s regulator, the Financial Supervisory Service (FSS), immediately held talks with the Korea Accounting Standards Institute and the Korea Institute of Certified Public Accountants (KICPA) to draft initiatives to introduce audit guidelines for cryptocurrency-related companies. The new guidelines drafted this time will force exchange-related companies to disclose more detailed platform currency data and tokens held.
Simultaneously, there is also South Korea’s “Digital Assets Basic Act”. Originally, the progress of the “Act” required a long period of review and preparation, but due to the FTX incident, the bill was brought forward and is expected to be completed next year. Kim So-young, vice-chairman of South Korea’s Financial Services Commission (FSC), said that given the urgency to protect users, it would be better to set minimum necessary regulatory standards and supplement them, rather than wait for international standards.
The Digital Assets Basic Act will consist of 13 crypto legislative proposals currently before the National Assembly. The bill is mainly to ensure that virtual asset service providers fulfill their obligations to protect user assets and prohibit service providers from issuing tokens.
In addition to this, South Korea’s ruling party is also reviewing a plan to amend the implementing decree of the Specified Financial Transaction Information Act so that virtual asset exchanges will completely separate their own assets from user deposits.
Japan – less impact regulatory acceleration
Since Japan has relatively strict policy supervision on cryptocurrencies, after the FTX thunderstorm incident, the Japanese financial regulatory agency announced after verification and investigation of the local digital asset exchange that the impact of this incident on its country is minimal. Japan The relevant institutions and people have not suffered too much loss.
But this does not mean that Japan has no action. Bank of Japan Governor Haruhiko Kuroda stated in an interview on the FTX thunder incident that he will quickly take regulatory measures to deal with the risks of encrypted assets.
Europe – regulation remains a theme
The European Central Bank is also concerned about the FTX thunderstorm. Compared with other countries, Europe as a whole is relatively calm. , (the market) shouldn’t be surprised by the recent cryptocurrency crash, whose wider impact looks limited.”
Calmness does not mean that Europe has relaxed its vigilance against the crypto market, and regulation is still the main topic of discussion. European Central Bank Governing Council Villeroy said in response to the FTX incident that he hoped that what happened in the cryptocurrency field would be a catalyst for international regulation. FSB Europe leaders also said there was an urgent need to regulate “so-called crypto conglomerates and exchanges that vertically integrate multiple functions.”
Other countries – regulation to come
As time goes on, various countries and regions are also expressing their attitudes towards the crypto market in response to the FTX thunderstorm incident. For example, the Australian government announced the establishment of a strong regulatory framework for cryptocurrencies, and the Ministry of Finance expects to formulate regulations to strengthen investor protection next year. regulations. In addition, countries such as Argentina and Turkey have expressed their attitude to regulate the crypto market after the FTX thunderstorm incident.
So far, countries around the world have gradually unified their attitudes towards the crypto market, and more and more countries have joined the ranks of supervision. In 2023, the crypto market may usher in its first year of regulation. With the gradual arrival of regulation, the gray area in the crypto market will become smaller and smaller, and the industry will enter a stage of accelerated reshuffle. The next test will be all crypto companies in the market, and they may face the choice of accepting regulation or dying.