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How cryptocurrency exchanges can regain investors’ trust in wake of FTX collapse
- In light of the uncertainty of centralised finance, users need ways to transact and move funds with ease and security more than ever before
- Above all else, there must be trust in user autonomy over assets, no matter the platform
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Why you can trust SCMP
The FTX scandal continues sending shock waves throughout the cryptocurrency industry.
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Few could have predicted that the highly-regarded centralised exchange (CEX) would implode, leaving vulnerable retail investors to bear the brunt of the catastrophe.
Thousands of FTX users were unable to pull their funds off of the exchange when insolvency rumours began to swell, and now may never be refunded. The collapse has underscored the vital importance for cryptocurrency users to be able to transact quickly and efficiently across platforms.
So what’s next for the cryptocurrency industry? CEXs adopting “proof of reserves” is simply not enough to win back users. In order to restore user trust, there are a few important steps that platforms can, and must, take.
In light of the uncertainty of centralised finance (CeFi), users need ways to transact and move funds with ease and security more than ever before. Individuals must be empowered to take control of their cryptocurrency keys.
While CEXs are convenient and boast a superior user experience, they should not be used to house long-term investments. Amid the FTX fallout, we are witnessing a massive migration from CeFi to decentralised finance (DeFi), but in order to both on-board and retain users, there must be assurances that they will be able to securely off-ramp and withdraw assets quickly.
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