FTX fall was ‘incredibly damaging’, crypto must promote real utility: Ripple policy lead

Ripple’s APAC Policy Director has described the fall of FTX as “incredibly damaging” to the crypto space, but says the industry should stand the test of time if the focus shifts to building “real utility.”

In a statement sent to Cointelegraph, Ripple’s APAC policy director Rahul Advani said he expects the FTX saga to lead to greater scrutiny of crypto regulations, while governments will reassess “their stance on crypto and blockchain technology,” adding:

“The collapse of FTX is incredibly damaging to the crypto space and once again underscores the need for greater regulatory clarity.”

Advani argued that the industry will need forward-looking and “flexible” regulations to boost confidence in the crypto sector while protecting consumers.

“[These regulations] must include robust measures for consumer protection, but also recognize the various risks posed by commercial crypto companies.”

“What we don’t want to see is a knee-jerk reaction that could stifle innovation in the sector,” he added.

Following the collapse of FTX, a number of regulators around the world pledged to focus on developing greater crypto regulation.

The Australian government is doubling down on its commitment to a regulatory framework for crypto and the International Monetary Fund (IMF) called for more regulation in Africa’s crypto markets, one of the fastest growing in the world.

Meanwhile, Commodity Futures Trading Commission (CFTC) Commissioner Summer Mersinger said on November 18 that the time to act on crypto regulation may have come, prompting experts to warn that crypto is in the crosshairs of US lawmakers.

However, Advani noted that a “one size fits all” approach to regulation “will not work” due to different risk profiles presented by crypto companies. He instead advocated a “risk-based approach” to regulating the industry.

He added that risks posed by crypto businesses include conduct requirements, such as separating corporate accounts, disclosing conflicts of interest and providing “safeguards for retail investors.”

Related: After FTX: Defi could go mainstream if it overcomes its flaws

“We remain convinced that crypto is here to stay and that real-world use cases will stand the test of time,” Advani said.

“I think the crypto industry needs to take a more focused approach, shifting from hype cycles to building real utility.”