FTX is a sacrificial lamb for the crypto industry

Following the news that cryptocurrency exchange FTX has filed for bankruptcy;

Suneet Muru, Analyst in the Thematic Intelligence Team at GlobalData, a leading data and analytics company, offers his view:

“FTX is the crypto industry’s latest sacrificial lamb. When Binance CEO Changpeng Zhao speaks, the industry listens, and this time he has exposed FTX’s weak points.

“FTX’s bankruptcy will be a classic example of ‘short-term pain, long-term gain’. It will deflate the crypto market cap over the next few months, but will force exchanges to realign their business models toward effective risk management. Now more than ever, exchanges must demonstrate how they differ from banks and keep far less of their own cryptocurrencies on their books.

“These same exchanges must also continue diversifying their revenue streams away from transaction fees and towards subscription-based products to limit exposure to market downturns.

“Most investors will sell their crypto holdings as their preferred tokens are hemorrhaging value. The sooner the industry realizes that FTX token is just one of many cryptocurrencies, the sooner it can get back to pushing the pace of adoption amidst imminent regulation.”