The FTX logo appears on a home plate umpire's jacket at a baseball game with the Minnesota Twins, in Minneapolis, Sept. 27, 2022. The rapid collapse and bankruptcy of crypto-exchange giant FTX shows the importance of regulation in the space where Canada has been a leader, experts say. THE CANADIAN PRESS/AP-Bruce Kluckhohn
TORONTO – The rapid collapse of crypto-exchange giant FTX shows the importance for the sector to be regulated, something that Canada has helped lead the way on, experts say.
Ryan Clements, chair in business law and regulation at the University of Calgary’s Faculty of Law, says Canada has several safeguards that would prevent some of the alleged practices at FTX, which filed for bankruptcy on Friday.
He says regulations in Canada were strengthened after exchange Quadriga went bankrupt and now include rules around third parties holding crypto assets, the need for insurance and limits on what can be traded, all of which benefit investors.
Clements says it’s much harder to enforce regulations on international exchanges, and direct peer-to-peer transfers, so investors need to be much more cautious when stepping out of the regulated space.
Henry Kim, an associate professor at York University’s Schulich School of Business and director of the school’s Blockchain.Lab, says he thinks the FTX fallout will hasten regulations generally in the sector.
He says it will also likely lead to more weaker coins going to zero as the effects of the collapse will continue to be felt for some time to come.
This report by The Canadian Press was first published Nov. 14, 2022.
