Crypto needs a lender of last resort and more regulation, as the crypto winter intensifies – Ben Samaroo
(Kitco News) – Sam Bankman-Fred’s cryptocurrency exchange FTX has rescued cryptocurrency lender BlockFi with a $ 680 million deal. The move comes amid challenges for the crypto industry, with companies such as Three Arrows Capital and Voyager facing bankruptcy, and others such as Celsius and Babel Finance freezing withdrawals and transfers.
This development means that we need better crypto-regulation and lending of the latest resort facilities, said Ben Samaroo, CEO and co-founder of WonderFi, a Canadian DeFi company.
“It all leads back to the need for regulation in this area,” Samaroo said. – We must know who is behind it [these crypto firms]how their operating policies and procedures work, all that. “
Samaroo spoke with David Lin, anchor and producer at Kitco News.
Regulation of crypto lending
Under beef markets, investors abhor regulations, while under bear markets, investors demand more regulation to protect their troubled assets, Samaroo said.
“That’s the amount of mentality,” he explained. “Warren Buffett calls it the limb effect. When things are hot, people just follow and do not think about the risk, the consequences, and they do not demand regulation. It’s all focused on growth, how to make more money.”
Crypto-lending platforms, such as Celsius, offer customers a return on their deposits of Bitcoin, Ethereum and other cryptocurrencies.
Samaroo said regulators will now look at “how platforms offer interest to their customers on deposits, and what goes on behind the scenes” in terms of influencing and controlling lending.
Crypt exchange
The Securities and Exchange Commission recently rejected Grayscale’s application for a Bitcoin spot ETF. Samaroo indicated that regulators are cautious and risk-averse, due to bearish trends in the crypto industry.
“Regulators care most about the end user, the customer, the investor,” he said. “We are definitely going to see a precipitation in the crypto market, which is related to how regulators approach things. It will provide an opportunity for higher risk, unregulated platforms to be weeded out. And then regulators will take their time. on becoming comfortable with things like a Bitcoin ETF. “
He pointed to the QuadrigaCX scandal, which involved a crypto boss who allegedly gambled away the client’s cryptocurrencies and stole passwords to offline cold wallets.
“We’ve seen this story before with the Quadriga debacle that happened in 2017, and then we did not see the first regulated cryptocurrency exchange until 2021,” said Samaroo. “It’s been four years. So, [regulators] go slowly, but it is generally the right direction despite all the pain and suffering that happens along the way. “
To find out how long Samaroo thinks Crypto Winter will last, watch the video above.
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