Considering the current market scenario, many industry experts have poured in their views, suggestions, predictions, etc. Adding to the trail comes an EY executive, extensively giving his opinions about the ongoing bear market and the need for regulations.
In a recent media interaction, Paul Brody, global blockchain leader at Ernst & Young Global Limited (EY), a multinational professional services partnership, discussed in detail the crypto winter and the rising need for regulation in the sector, citing the recent collapse of FTX.
In response to his anticipations about the crypto winter and its chances to stay, the firm’s executive said that the present crypto winter is much milder compared to the previous one, and there is a significant decoupling taking place between the price of crypto and product and engineering development work happening in the industry.
“For the first time, price ups and downs don’t have that big of an impact on the industry’s long-term growth. We are slowly moving away from the pure financial focus of the industry.”
He also highlighted that the trend wherein the fluctuating prices aren’t having a significant long-term impact on the growth of the industry, thus marking a tangential shift from the financial focus of the sector. In relevance to his statement, he added the example of the Ethereum ecosystem, which presently is much more focused on other technical aspects like application development, non-fungible tokens (NFTs), and decentralized autonomous organizations (DAOs).
When asked about the dwindling trust of the masses viewing the recent collapses, Brody highlighted the flawed concept of transparency that accompanies the crypto sector. He said that the whole idea of crypto was to provide transparency, giving access to the data on the blockchain. However, just viewing doesn’t give one access to it, as the data flow in smart contracts needs to be simplified to understand.
According to him, entities in the crypto sector that have mixed on-chain and off-chain financial transactions in the absence of efficient regulation are the ones that could be doing better. He highlighted the need for essential governance, which is easy for everyone to abide by, or a rigorous approach from the government involving audits.
Brody said that in such a scenario where firms work as per their convenience and manipulate data in their favor, it becomes impossible for one to assess if their assets are being strictly held and used in their favor or if they are being used to fulfill other purposes.
Additionally, he raised the need for stricter regulation to tackle such problems calling on the regulators to be more vigilant and efficient towards prominent Ponzi schemes. The authorities must be as rapid and sincere as possible in cracking down on these schemes.
“It is also important that regulators crack down on obvious Ponzi schemes faster and more seriously. I would like more regulatory activity and rules that good players can follow.”
Brody also expressed his enthusiasm towards more intense regulatory activities and rules in the market for the firms to follow as they would help ensure a check mechanism on the firms and their functioning.
Recently, regulators and institutions across the globe have called for stricter and tighter regulation of crypto, including the Bank of England and the White House. Adrienne Harris, superintendent of the New York Department of Financial Services (DFS), in a country-wide discussion about the regulation of the sector, called for a stricter model similar to that of New York.