The crypto winter has arrived, but will it end?
SINGAPORE: The cryptocurrency ecosystem - which has taken a hammering after reaching euphoric highs last year - is expected to be more regulated moving forward, forcing players to be more diligent in following the rules, said one observer.In the past year, cryptocurrency prices have crashed, major players have toppled and investors are pulling out their funds in one of the harshest crypto winters ever, stoking fears that the troubles in the crypto sphere could even spill over into more traditional assets.“One of the reasons why we have such extensive contagion in crypto is because there is no lender of last resort and without a lender of last resort, contagion flows to the system with no breaks,” said Mr Paul Brody, global blockchain leader at professional services firm EY, on Tuesday (Dec 20). “My expectation is that we will not only see a much more regulated crypto ecosystem, but we will see a crypto ecosystem with frankly a lot less crypto in it and a lot more stablecoins.” Stablecoins are designed to have a stable value, typically by being backed or pegged to an underlying asset such as a currency.Citing Japan as a benchmark, Mr Brody said it has a rigorous regime - after the collapse of Tokyo-based bitcoin exchange Mt.
Gox - that “depends not just on companies behaving themselves, but on government inspection and the requirement for third party auditors''. “I think we're going to see more regulation or a regulatory environment that looks more like Japan's, with a requirement for inspection by third parties in order to be in this business,” he told CNA’s Asia Tonight.“I think we want a much more diligent crypto sector coming out of this.
