EY’s global blockchain leader, Paul Brody, voiced for the first time the assessment that cryptocurrency price fluctuations do not have as big an impact on the long-term growth of the industry.
He further noted: “It is important that regulators fight obvious Ponzi schemes more quickly and more rigorously.”
The Need For Regulation
Paul Brody, who is the global leader in EY’s blockchain practice, addressed the cryptocurrency winter and the need for regulation of the industry following the collapse of the cryptocurrency exchange, FTX, in an interview published by Mint last Thursday.
Brody was asked if he expects the current winter in cryptocurrencies to end soon and he replied:
“This is a much milder cryptocurrency winter than the previous one. One of the main features of this winter is that there is a disconnect between the price of cryptocurrency assets and the product development and engineering work underway in the cryptocurrency industry.”
In addition, Brody pointed out:
“For the first time, price rises and falls do not have such a large impact on the long-term growth of the industry. We are slowly moving away from the pure financial focus of the industry.“
Ethereum is focused on growth
He went on to add that Ethereum’s ecosystem is now more focused on app development, non-exchangeable digital assets (NFT) and decentralized autonomous organizations (DAOs).
The need for regulation
Responding to a question about whether users can trust cryptocurrency exchanges after the collapse of FTX, Brody warned:
“It is impossible to know if your assets are strictly held and used for you or if they are frozen and used for other scenarios. The key solution is that your governance needs to be either simple enough for people to follow, or you can take a tightly controlled and publicly traded approach.”
He also stressed the need for tighter regulation, stating:
“It is important that regulators tackle obvious Ponzi schemes more quickly and more rigorously. I would like to see more regulatory activity and rules that good players can follow.”
Calling for regulation
After the FTX collapse, many people asked regulators in various jurisdictions to step up their oversight. The Bank of England’s deputy governor for financial stability, Sir Jon Cunliffe, stressed this week that the collapse of FTX has highlighted the urgent need for tighter regulations.
The White House and several US senators have called for proper oversight of cryptocurrencies. A US lawmaker recently urged the Securities and Exchange Commission (SEC) to take decisive action to regulate the cryptocurrency industry.