The shock waves of the FTX collapse have spread across the entire crypto industry. As the second-largest crypto exchange collapsed, more than $200 billion were eroded from the crypto space in a week’s time.
Yuzo Kano, the chief executive officer and co-founder of major Japanese crypto exchange bitFlyer Inc. called it the “Lehman shock” to the crypto industry. Yuzo believes that FTX’s collapse could spread like a contagion causing more firms to fail.
We have seen that crypto lending giants like BlockFi have already paused withdrawals at their end, owing to the FTX crisis. Another crypto lender Salt has paused deposits and withdrawals saying that the FTX collapse has impacted their business.
The collapse of Lehman Brothers in 2008 spread across the entire banking industry leading to a global recession. With the FTX crisis, the bitFlyer CEO is expecting a similar situation in the crypto space.
Yuzo Kano also praised the regulatory system in Japan saying that the Financial Services Agency (FCA) has successfully implemented a double layer of oversight. This ensures greater protection for consumers.
“I think regulation is very important,” said Yuno. “The rest of the world may follow” Japan to strengthen its regulatory oversight on digital assets. He also said that there should be rules wherein the crypto exchanges manage clients’ assets separately from their own. He further confirmed that bitFlyer had absolutely no dealings with the FTX. Thus, the collapse has “no impact at all” on the Japanese exchange.
bitFlyer – Crypto Financial Crisis
The bitFlyer CEO is not the only one to compare it with the Lehman Brothers incident. Earlier this, Binance chief Changpeng Zhao also compared it to the 2008 financial crisis and said that the industry will take some time to recover from it. He said:
“I think that’s probably an accurate analogy. With this type of event happening, it’s devastating for the industry. A lot of consumer confidence is shaken, and I think basically it sets us back a few years. With FTX going down, we will see cascading effects. Especially for those close to the FTX ecosystem, they will be negatively affected.”
Binance’s chief also called for establishing global standards for cryptocurrencies to prevent such events in the future.
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