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FTX Collapse: What Can We Learn?

Written by Jon Deane

Chief Executive Officer at Trovio Group

There is a significant amount of discussion on different media outlets around the collapse of FTX in the last 72 hours. Having traded through the 2008 financial crisis, and witnessed the collapse and contagion caused by Lehman’s, it is a fair comparison that crypto is having its own Lehman’s moment. However, FTX is not crypto, nor is it a blockchain solution. FTX is/was a centralised exchange that provided a facility to transfer digital assets between participants on the existing rails that we use in traditional finance, albeit without the regulation over the use of client funds or transparency that we would expect from other traditional exchanges/brokers. The use case for public and private blockchains is accelerating across real-world assets. Whether that is in commodities, carbon, fixed income, or the emergence of central bank digital currencies, as the rails to facilitate atomic settlement with these assets, it is clear we are quickly advancing towards the age of digitisation. Crypto has provided, and will continue to provide the innovation, the community and advancements that are required to achieve these ultimate goals. FTX is an example of why we need decentralization, transparency as well as the infrastructure to ensure we comply with regulation. While it is hugely disappointing and sad to see some of the losses incurred in the community, I believe, and we all do at Trovio, that industry will emerge with significantly less deadweight and vast opportunities for those that continue to navigate, what is ultimately a highly dynamic and fast-moving industry.

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