The cryptocurrency exchange FTX has seemingly come and gone. The fall of the exchange will likely go down as one of the biggest embarrassments of the digital currency space, and as a result, many players within the industry are calling for exchanges to become less centralized. They are certain that decentralized finance (or defi as it’s called for short) is the answer to many of crypto’s problems.
Every Exchange Is Being Told What to Do
There is a big idea flowing through the crypto space at the time of writing. It’s:
Not your keys, not your coins.
What this means is that if you don’t hold the private keys to your crypto account, it doesn’t matter how many units you purchase. They are not really yours, and they can be thrown out from under you anytime the holding exchange sees fit to take such action. Crypto fans are confident only in themselves, not in third parties.
Tracy Wang – a crypto journalist and managing editor – explained in a recent interview:
A company like FTX was supposed to hold your assets, but they ended up lending them out. This is like taking power back and being… in charge of your own money.
There are several exchanges out there that see firsthand the growing fear that stems from the collapse of FTX. Coinbase, for example, appears largely unaffected by the fall. The exchange has put out several notices telling customers that their funds are safe, and that it will never lend their money out without permission. However, some traders don’t feel this is enough reassurance.
Caitlin Long – the founder and CEO of crypto organization Custodia Bank – stated:
Those of us grizzled veterans have seen this game before. We’ve been trying to warn folks. Get your coins off exchanges, and there’s been a huge wave since FTX collapsed.
It is now being reported that more than $2 billion in digital currency funds have been removed from crypto exchanges over just the last few weeks alone. The fear is real, and it appears to be getting bigger. This has caused a new call for regulation that would enforce new laws requiring crypto exchanges to protect their customers’ money at all costs. Long continued with:
You’re just giving temporary possession for safekeeping. [They] can’t lease it to be used on Uber, and if the garage goes bankrupt, that’s not an asset of the garage. They can’t drive your car away. This is very simple, very boring, but foundational.
We Need to Be Like Wyoming
To prove her point, she told traders to look at the current regulatory system in place in Wyoming. Any exchange based in the state, for example, is already being subjected to such rules. She says:
If Wyoming’s regime had been in place, FTX wouldn’t have happened.
