Crypto-currency winter no longer impacts long-term industry growth, says EY executive

The head of blockchain at EY says that, for the first time ever, crypto-currency price fluctuations are not having such a big impact on the long-term growth of the sector. Nevertheless, he points out, “It’s also important that regulators crack down on obvious Ponzi schemes more quickly and with greater severity.

EY’s Brody on the winter of crypto-currencies

Paul Brody, global blockchain leader at EY, discussed crypto winter, the need for regulation and the FTX crypto exchange collapse in an interview published by the publication Mint on Thursday.

He was asked if he expects the current crypto winter to be over soon. “It’s a much milder crypto winter than the last one,” he replied. “One of the key features of this winter is that there is a decoupling underway between the price of crypto assets and the product development and engineering work that is going on in the crypto industry.“The EY executive is of the opinion that:

For the first time ever, price ups and downs are not having such a big impact on the long-term growth of the industry. We are slowly moving away from the purely financial focus of the industry.

He added that the Ethereum ecosystem is now much more focused on application development, non-fungible tokens (NFTs) and decentralized autonomous organizations (DAOs).

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Brody on the FTX collapse and the need for crypto-currency regulation.

The EY executive also spoke about the collapse of the crypto-currency exchange FTX, which some have compared to a Ponzi scheme, including Bernie Madoff’s infamous one.

Responding to a question about whether users can trust crypto exchanges after the FTX collapse, he warned, “The idea behind crypto was that it’s totally transparent since it’s on the blockchain and you can see if something bad has happened. This was a flawed theory. Seeing the data does not mean you can understand the complex data flow in smart contracts.

Entities that have tried to mix on-chain and off-chain financial transactions without robust regulatory oversight are the ones that don’t fare well“, Brody continued.

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It was impossible to know if your assets are strictly held and used for you, or if they are pledged and used in other scenarios“, warned the blockchain leader at EY. “The key point to remember is that your governance must either be simple enough for people to follow, or you can take a rigorously audited and publicly traded approach.

He also stressed the need for stricter regulation, stating:

It is also important that regulators address obvious Ponzi schemes more quickly and with greater severity. I would like to see more regulatory activity and rules that good players can follow.

After the FTX collapse, many people called on regulators in various jurisdictions to step up their oversight. The Bank of England’s deputy governor for financial stability, Sir Jon Cunliffe, noted this week that the FTX collapse highlighted the urgent need for stricter regulation. The White House and several U.S. senators have called for proper oversight of crypto-currencies. One U.S. lawmaker recently urged the Securities and Exchange Commission (SEC) to take decisive action to regulate the crypto-currency industry.

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