SteelEye calls for regulation amid FTX collapse: “We run the risk of seeing this happen again”

Rick Steves

Matt Smith, CEO and co-founder of compliance technology and data analytics firm SteelEye, has called for digital asset regulation instead of ‘just letting crypto burn’.

The statement was made amid the fallout from FTX’s collapse as more questions are being posed within the longstanding debate about crypto regulation.

“Crypto regulation is in the news again following the collapse of FTX, and it remains an enormously complex challenge. On the one hand, regulators argue that the laws governing securities, exchanges, brokers, funds and advisers should apply to crypto, and on the other, industry commentators believe that regulating crypto like stocks and bonds would award it with “undeserved legitimacy”, or a regulatory “seal of approval” arguing that we should “just let crypto burn.

Protect retail investors and prevent systemic risk

“Crypto regulation is of course a responsibility that needs to be taken seriously by regulators worldwide and we welcome debate around the future of the market, however, leaving crypto unregulated would be a grave mistake. With the uptake of crypto among retail investors and financial institutions (particularly in asset management), the ripple effects of simply letting it be would have far reaching consequences.

“Regulation should do two things – protect retail investors, and protect the system, to prevent systemic risk. If we don’t regulate this space retail investors will continue to be hurt, as will the hedge funds and asset managers that have engaged with crypto so far. We have already heard of multiple managers with large portions of capital tied up in FTX. If we don’t intervene, we run the risk of seeing this happen again and again. FTX was, after all, regarded as one of the most stable and legitimate crypto exchanges, alongside Binance.

“Regulating crypto might “legitimize it” and encourage more institutions to invest in this volatile currency. However, on the buy-side, this is already well underway. Abandoning the mission to regulate what is currently the wild west of crypto finance is unlikely to change the status quo. We envisage a world in which regulation is sufficiently sophisticated, to protect retail investors and make crypto a more stable investment for financial institutions. That way, we can protect the system as a whole, before too much damage is done.”

Read this next

Interviews

FIA EXPO 2022: Interview with Trading Technologies

The derivatives trading industry has gathered in Chicago to attend the FIA EXPO 2022 on 14-15 November. 

Market News

What’s moving markets for the week ahead 

The US labor market and the OPEC+ meeting are the most important variables for next week.

Digital Assets

Payments innovator BVNK acquires SPS Ltd to become UK EMI licensed operator

“We believe that regulated, fiat-backed stablecoins combined with the best parts of traditional payments will provide the infrastructure needed to deliver this vision. We will continue to obtain new licences and build out our capabilities to provide our customers with an unparalleled offering.”

Technology

Innovations in Technology and the User Experience — A MarksMan Update

MarksMan Liquidity Hub, the go-to platform for crypto spot liquidity solutions, has just unveiled an exciting update with new UI/UX features.

Technology

Alveo adds Sentiment indicators, Tax, and Regulatory Risk data from SIX

“Market participants increasingly need on-demand access to our vast catalogue of global financial and investor protection related data.”

Technology

B2C2 taps KX to enhance analytics for institutional crypto

“KX technology is proven in enhancing a broad range of mission-critical data and trading systems across front, middle and back-office operations for the majority of the world’s leading tier-one banks, brokerages, and investment firms.”

Executive Moves

ADVFN appoints Amit Tauman as CEO

ADVFN operates global financial information websites for retail investors.

Institutional FX

HKEX launches Hang Seng TECH Index Futures Options, adds after-hours session

“The launch of the Hang Seng TECH Index Futures Options and enhancements to the broader suite of Hang Seng TECH Index derivatives today will provide global investors even more choice and flexibility, helping them to successfully manage their portfolios and risks.”

Industry News

Finastra opens Center of Excellence in Kuala Lumpur

Finastra has expanded its footprint by opening a Center of Excellence (COE) at Malaysia’s MRANTI Technology Park in Bukit Jalil, Kuala Lumpur.

<