The second problem will be pinning down companies based elsewhere. Take Binance, by the far largest crypto exchange. It has an affiliated American business, Binance.US, but that company is tiny relative to the parent. The danger is that regulators in their back yard can’t see what’s happening in someone else’s. Global co-ordination has proved challenging on other issues like minimum corporate tax rates; a common framework for something as complex as crypto is a pipe dream.
The industry’s best hope is that regions with clear, customer-friendly rules will attract big institutional money and protect retail traders. But borders are porous, and money finds a way to where the biggest rewards are on offer. Bankman-Fried initially said the U.S. division of FTX was insulated from the problems at his Bahamas-based exchange. Still, on Friday it filed for bankruptcy alongside the wider group. The coming wave of regulation may protect the good, but it won’t stop the reckless.
FTX filed for bankruptcy on Nov. 11, after traders rushed to withdraw $6 billion from the platform in just 72 hours and rival exchange Binance abandoned a proposed rescue deal. Bitcoin was trading at roughly $16,600 at 0835 GMT on Nov. 17, compared with around $20,500 at the start of the month.Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
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