Extraterrestrial Token

The unexpected collapse of the FTX trading platform and all of its affiliated entities has sent shock waves through the cryptocurrency market, Web3 and DAPP industries.In less than a week in November 2022, FTX endured speculation about a funding shortage, withdrawal runs, withdrawal closures, a potential acquisition offer from Binance (which was quickly withdrawn), an SEC investigation, suspicious transfers of a large number of platform tokens, hacking, and bankruptcy statements from all of FTX’s affiliates.This story is not over yet. However, it has already had a significant impact on the market. And is probably the main driver of the current price drop in the cryptocurrency market. We can see huge asset outflows from some trading platforms as users fear more platforms will experience bankruptcy crisis in the near future.<img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/f4356ccfe2b449ef90ec0958920dd59f.png" />Despite the FTX crash, the Web3 industry seems to have regained its vitality in the last two weeks.Even though on-chain activity has decreased by 11.67%, there are still 1.9 million daily Unique Active Wallets (UAWs) and over 25 million transactions per day.DeFi UAW peaked on November 9 and 10, with about 500,000 UAWs on both days, and DeFi activity has now returned to last month’s levels of about (400,000 UAWs).GameFi dApp seems unaffected by the FTX crash and still has 814,305 UAW over the past two weeks.The total value locked (TVL) of DeFi projects fell by 20.60% to $65 billion.On the other hand, the NFT market is far from dead, and its current slowdown in growth is due to socioeconomic factors rather than waning user interest in NFTs. NFT sales fell only 24.50%, and NFT trading volume fell 68.60%. The average daily NFT trading volume is $11.94 million and the daily sales volume is 93,925.It can be said that the NFT market has basically not been greatly impacted, but individual top projects such as Star Atlas have suffered a devastating blow. 50% of their funds are stored on FTX. The bankruptcy of FTX has caused project development to face huge challenges.However, the impact of the FTX incident on the financial aspects of crypto-asset related companies, institutions and capital is gradually being digested, and some companies have apparently come out of the down turn, but the crisis of trust for crypto-assets as a whole is just unfolding.First of all, there is the crisis of trust. The FTX bankruptcy was devastating for individual users!On Nov. 11, SBF announced that FTX, FTX.US, Alameda Research and about 130 other affiliates had filed for Chapter 11 bankruptcy, and court documents indicate that FTX Group may have “more than 1 million creditors” in these Chapter 11 cases, legal experts claim that many customers may never get their money back.Users are becoming less trusting of crypto-assets and centralized exchanges, with data showing that after the FTX bankruptcy, almost all cryptocurrency exchanges were questioned by users and even asked for proof of liquidity! Next is more strict regulations!There are reports that FTX still has $1 — $2 billion in unaccounted-for customer funds, which is deeply troubling. Wide-spread signs of consumer damage and corporate misconduct only increase the likelihood that a US-led government will take action to regulate the crypto industry.This is not unwarranted; on November 11, Sam Bankman-Fried (SBF) announced that FTX, one of the world’s top cryptocurrency exchanges, filed for bankruptcy, and subsequently, U.S. congressional lawmakers and experts were quick to seize on the rapid disintegration of FTX and call for more regulation of the crypto industry. White House Press Secretary Karine Jean-Pierre, for once, said, “The recent news further underscores these concerns [about consumer harm] and underscores why prudential regulation of cryptocurrencies is indeed needed.”Meanwhile, according to the latest news, a Senate committee will hold FTX-related hearings in December, with Commodity Futures Trading Committee Chairman Rostin Behnam in attendance. The committee’s leaders, Democrat Debbie Stabenow of Michigan and Republican John Boozman of Arkansas, have been working on legislation to create a CFTC-centric regulatory regime around crypto commodities, primarily bitcoin.These are all signs that the government wants to use the FTX bankruptcy to carry out actions to tighten crypto asset audits and make crypto asset regulatory reforms.<img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/92a8f519e8814d85b651fc9314ef178b.png" />Let’s redirect our attention to the U.S., where current regulatory bills for crypto assets are dominated by smaller bills, but two major bills seek to provide transparency to the crypto industry. the Lummis-Gillibrand proposed Responsible Financial Innovation Act delineates the jurisdiction of the SEC and CFTC over digital assets, allowing exchanges to regulate digital assets under the CFTC’s jurisdiction. jurisdiction, allows exchanges to register with the CFTC, and imposes new requirements on stablecoin providers. The Digital Commodities Consumer Protection Act (DCCPA) would grant the CFTC exclusive jurisdiction over digital commodity transactions, require exchanges to register with the CFTC, and establish new disclosure requirements for digital commodity brokers, among other things.The DCCPA is sponsored by the chairmen and ranking members of the House and Senate Agriculture Committees, which have jurisdiction over commodity markets, with only minor differences between the House and Senate versions of the bill.With Congress in recess, both bills are unlikely to pass before the end of the year. However, law makers have made it clear that they intend to re-visit the issue next year, and the FTX debacle only increases the likelihood of legislative action on cryptocurrencies.In addition to comments from the White House and federal regulators, law makers haven’t budged on the FTX issue. Senator Sherrod Brown, Democrat of Ohio, said the SBF should be called to testify before the Senate and urged regulators to “crack down” on the industry. Sen. Elizabeth Warren, a Massachusetts Democrat who has historically been critical of cryptocurrencies, said the industry is mostly “smoke and mirrors” before calling for more regulation.Other members of Congress were more subtle in their comments about FTX. “Oversight is one of the most critical functions of Congress, and we must get to the bottom of this for the sake of FTX’s customers and the American people. We must hold bad actors accountable so that responsible participants can use technology to build a more inclusive financial system,” said Rep. Patrick McHenry, R-N.C. Michigan Sen. Debbie Stabenow and Arizona Sen. John Boozman, the original sponsors of the DCCPA in the Senate, point to the FTX debacle as evidence that Congress should pass its bill.Congress will likely act to regulate cryptocurrencies next year. the FTX collapse makes it almost a foregone conclusion.And what should we do as crypto asset practitioners in the face of this form? In my opinion, regulation is a double-edged sword. Although it will have a great impact on the current crypto asset market or even shrink, it is a process that is bound to be experienced in order to de-bubble and formalize, and only in this way can the crypto asset industry truly stand under the sunlight globally.We should actively embrace the changes, while also calling for regulatory transparency for crypto applications without hindering innovation.<img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/cdd98b6ef8cf4db2a784120628e472e5.gif" />

Cryptocurrencies to face regulatory winter and crisis of trust as FTX follow-up impacts are already in place

SuperExet

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