“We might see centralized exchanges face some new requirements, such as the need to separate custody of client assets from the exchange itself,” said Frederic Lardieg, a partner at Mubadala Capital Ventures, which co-led a $70 million funding round in crypto payments company Ramp this month.
Cold Wallets, DeFi
Many traders aren’t waiting to find out. Exchange reserves of Bitcoin and Ether are at their lowest levels since 2018, data from CryptoQuant show. Stablecoin reserves have slipped to the lowest since January, according to the data, which measures the number of tokens rather than the dollar value.
Ledger, the French maker of “cold storage” hardware crypto wallets, saw weekly sales soar to a record after FTX started crumbling, according to CEO Pascal Gauthier.
Crypto investors also appear to be switching to decentralized finance, where trading is handled without intermediaries and governed by so-called smart contracts that execute trades and liquidations based on a transparent set of rules.
“There has been a dramatic hit to confidence in not just the instrument, but the market structure which holds up the entire asset class,” said Dushyant Shahrawat, director of investment banking at Rosenblatt Securities, which offers advisory to crypto and fintech companies.
--With assistance from Eva Szalay and Suvashree Ghosh.
This article was provided by Bloomberg News.