The cryptocurrency industry is being urged to prioritize investor education over strict regulations in order to recover from the recent downfall caused by the collapse of the FTX exchange. The collapse resulted in the loss of $8.9 billion in user funds, according to Moe Vela, a former senior adviser to President Joe Biden and senior adviser to Unicoin.
Vela emphasized the importance of financial education, particularly in risk management, in an exclusive interview with Cointelegraph. He believes that educating investors, especially those who are inexperienced, should be the main focus of the crypto industry.
This statement comes in response to FTX’s new amended proposal, which was released on May 7. The proposal promises billions in compensation for the users and creditors of the bankrupt exchange who have been unable to access their funds since November 2022.
The collapse of FTX and its numerous subsidiaries led regulators to take action and develop regulations that prioritize investor safety. The United States Securities and Exchange Commission (SEC) has also started cracking down on crypto exchanges to prevent another FTX-like meltdown.
However, Vela argues that instead of strict regulations that may hinder digital asset innovation, the industry would benefit more from educating inexperienced investors. He also serves as an adviser for Unicoin, a cryptocurrency backed by assets that aims to reduce the volatility associated with traditional cryptocurrencies. Through his involvement with Unicoin, Vela has learned that risk mitigation is crucial for both traditional and crypto investors.
Vela believes that as the crypto industry becomes an integral part of our future, regulations that support innovation should remain a top priority.
Since the collapse of FTX, crypto exchanges worldwide have been striving for more transparency in their operations. This movement has been led by Binance, the world’s largest exchange, which has faced scrutiny from the SEC. In June 2023, the SEC sued Coinbase and Binance for alleged securities violations. Binance was charged with violating Anti-Money Laundering laws and settled to pay $4.3 billion, one of the largest criminal fines in history.
This type of regulatory enforcement contrasts with Vela’s innovation-friendly approach. He believes that strict regulations can stifle the industry’s growth and potential.