Speaking on CNBC’s “Closing Bell” Thursday, Peter Smith deemed the collapse of crypto exchange FTX as “a tragedy and total failure of governance.”
The CEO and co-founder of crypto exchange Blockchain.com noted that there is a need for crypto investors to go back to the drawing board and hold their assets on their own private keys.
“Crypto is one of the very few assets in the world that you can custody yourself, and I think we’re going to see folks increasingly move back to that model as well as move to a model of trusting regulated companies in the space.”
“The ultimate reality and the coolest part of crypto is that you can store your funds on your own private key where you have no counterparty exposure.”
The liquidity crisis facing FTX will also include various measures incorporated into the crypto ecosystem, the Blockchain.com CEO pointed out.
For instance, a trend towards regulated cryptocurrency institutions will be the norm, and more crypto investors will emphasise corporate structure.
Smith highlighted that FTX was significantly popular within Silicon Valley-based groups. As a result, it did not emphasise the cryptocurrency economy significantly. He noted:
“This was very much a Silicon Valley momentum play, and we’ve seen that very clearly not work out.”
Some analysts believe Coinbase will be among the major beneficiaries when the greater focus is on regulated crypto entities.
The proof-of-reserves concept is also making circles in the crypto space with the aim of rendering more transparency, Blockchain.News reported.
A proof-of-reserve uses a Merkle or Hash tree for data verification, synchronisation, integrity, and transparency purposes. “What is Proof-of-Reserves? An audit by a 3rd party ensuring that a custodian holds the assets it claims to. A snapshot of all balances held is taken & aggregated into a Merkle tree, a privacy-friendly data structure encapsulating balances,” Crypto exchange Gate.io explained.
Binance CEO Changpeng Zhao (CZ) prompted the proof-of-reserves trend because it would propel more transparency in crypto exchanges by pointing out their digital asset holdings.
Image source: Shutterstock