Why the fall of FTX triggered a year of reinvention for Crypto

In the year On November 11, 2022, the blockchain industry faced a memorable moment when FTX, a one-time $32 billion crypto exchange, and more than 100 affiliates filed for bankruptcy.

This development sent shock waves through the market for the third largest cryptocurrency exchange with a user base of over a million. FTX's sudden bankruptcy and bankruptcy filing revealed that the currency had an $8 billion hole in its balance sheet. BeInCrypto sheds light on important lessons the industry learned from the FTX failure.

The resilience of the Crypto market

After the FTX crash, the crypto market has been in turmoil, which has seen major assets such as Bitcoin and Solana fall to year-to-date lows. The initial skepticism paints a grim picture of the industry and suggests a loss of investor confidence.

Fast forward a year, and the crypto market has not only weathered the storm, it has grown. Established financial institutions such as BlackRock and PayPal have enthusiastically entered the crypto arena with varying degrees of success. In particular, digital assets like Solana, recovering from heavy losses, are forming strategic partnerships to grow their technology footprint.

Well-known crypto analyst Kaleo reflected on the change:

“One year after the collapse of FTX, Bitcoin's resurgence and bullish momentum is really valid in the crypto ecosystem,” Kaleo said.

Read more: 7 must-have cryptocurrencies for your portfolio before the next bull run

This resurgence underscores an important lesson – that crypto will inevitably play a critical role in shaping the broader financial environment.

Not your keys, not your tokens

The failure of FTX taught an important lesson about self-improvement in the crypto community. He emphasized the importance of individuals holding their cryptocurrency securely.

Self-retention ensures sole access to assets without relying on third parties. In response to this shift in attitudes, US lawmakers introduced the Keep Your Coins Act, which would allow crypto investors to control their digital assets in a hands-off manner.

This development has led to the rise of self-managed organizations such as Ledger and Trezor, which dominate the market as custodians of individual crypto assets.

Increasing regulatory control

The collapse of FTX has highlighted a regulatory vacuum that has been rife in the crypto industry for years.

In response, regulators from Hong Kong to the United States are tightening controls on emerging industries around the world. They are establishing a strong regulatory framework for the crypto market to ensure stability and investor protection.

Reflecting on this, crypto user TrieuPH had this to say:

“Rebuilding trust and healing the market will take time, but the industry has shown resilience and innovation during these challenging times.”

Read more: How to prepare for a Bitcoin ETF: A step-by-step approach

Despite attracting huge investments from major venture capital firms and celebrity endorsements, FTX's failure is a stark reminder of “don't trust, verify.”

Despite diligent claims, investors have been blindsided by the FTX scam. Meanwhile, this underscores a core principle of the crypto industry – claims that can be verified with confidence. Transparency remains the cornerstone on which the industry's trust is built.