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Last year’s collapse of the crypto exchange FTX resulted in a tectonic shift for the industry.
Undermined confidence in the nascent sector compounded by unprecedented regulatory scrutiny are just some of the repercussions of those events, which revealed the mismanagement of billions of dollars of investors’ funds on the part of the exchange’s founder Sam Bankman-Fried and the affiliated companies.
Speaking on Decrypt's gm podcast, Coinbase's chief legal officer Paul Grewal said “there’s no question that FTX set the entire industry back, and frankly, the whole conversation around crypto.”
To Grewal, this is understandable, to a large extent, since “what we saw with FTX was nothing short of flat-out fraud. And that should give everyone, including regulators, concern, and perhaps even pause, on the right way to make sure that tragedies like that never happen again."
‘No monopoly on wisdom’, says Coinbase legal chief
Grewal’s remarks come amid a recent wave of regulatory enforcement actions, including a $30 million fine for Coinbase’s competitor Kraken imposed by the SEC for offering unregistered securities.
Coinbase’s chief legal officer still thinks that the crypto industry deserved some of the criticism, saying “that it was complaining about rules or the possibility of rules without really offering solutions.”
To Grewal, the right way to find solutions is to be proactive and be engaged in more conversations with regulators and policymakers.
“I do think that the conversations have not been as open as they could be and should be when it comes to figuring out what digital assets qualify as securities, figuring out what are the right standards and rules that ought to be adopted for issuer disclosures,” Grewal told Decrypt.
According to him, there could be a very long list of questions to be discussed with the regulators, “but the point is that no one has a monopoly on wisdom in crypto.”