EY’s global blockchain leader says that for the first time ever, crypto’s price swings do not have that big of an impact on the long-term growth of the industry. Nonetheless, he stressed: “It is also important that regulators crack down on obvious Ponzi schemes faster and with more severity.”
EY’s Brody on Crypto Winter
Paul Brody, global blockchain leader at EY, discussed the crypto winter, the need for regulation, and the collapse of crypto exchange FTX in an interview published by the Mint publication Thursday.
He was asked whether he expects the current crypto winter to be over soon. “This is a much milder crypto winter than the last one,” he replied. “One of the major features of this winter is that there is a decoupling going on between the price of crypto assets and product and engineering development work that is going on in the crypto industry.” The EY executive opined:
For the first time ever, price ups and downs don’t have that big of an impact on the long-term growth of the industry. We are slowly moving away from the pure financial focus of the industry.
He added that the Ethereum ecosystem is now much more focused on application development, non-fungible tokens (NFTs), and decentralized autonomous organizations (DAOs).
Brody on FTX Collapse and the Need for Crypto Regulation
The EY executive also discussed the collapse of crypto exchange FTX, which some have compared to Ponzi schemes, including the infamous one run by Bernie Madoff.
Responding to a question about whether users can trust crypto exchanges following the FTX meltdown, he cautioned: “The idea behind crypto was that it is fully transparent since it is on the blockchain and you can see if something bad happened. That was a flawed theory. Seeing data doesn’t mean you can understand the complex data flow in smart contracts.”
“Entities that have tried to blend on-chain and off-chain financial transactions without robust regulatory oversight are the ones that are not doing well,” Brody continued.
“It’s been impossible to know if your assets are strictly being held and used for you, or if they are being pledged and used in other scenarios,” the EY blockchain leader warned. “The key takeaway is that your governance has to be either simple enough for people to follow or you can take a rigorously audited and publicly traded approach.”
He also emphasized the need for stricter regulation, stating:
It is also important that regulators crack down on obvious Ponzi schemes faster and with more severity. I would like to see more regulatory activity and rules that good players can follow.
Following the meltdown of FTX, many people have called on regulators in various jurisdictions to tighten their oversight. Bank of England Deputy Governor for Financial Stability Sir Jon Cunliffe stressed this week that the FTX collapse has highlighted the urgent need for tighter regulation. The White House and several U.S. senators have called for proper crypto oversight. A U.S. lawmaker recently urged the Securities and Exchange Commission (SEC) to take decisive action to regulate the crypto industry.
What do you think about the comments by EY’s executive? Let us know in the comments section below.
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