The crypto exchange world is coming apart. FTX, BlockFi, maybe Crypto.com. Institutional investors are getting out.<p>If either Binance or Tether goes down, it's all over. Both are opaque and probably have less reserves then they claim. As withdrawals continue, we'll find out who really has assets.<p>People who like to read financial statements are awaiting the filings in the FTX bankruptcy. For the first time, all those related companies have to file public financial statements under penalty of perjury. Expect a lot of "They did <i>what</i> with that money?!"<p>What may well happen now is that US crypto exchanges, and those that deal with US persons, will be required to become brokers, dealers, or "national securities exchanges" under the Securities Act of 1934, like real stock exchanges.[1] The SEC can now do this, because, last week they finally won the first big lawsuit on whether crypto is a security.[2] Now they can tell all crypto issuers to register and file an S-1 under penalty of perjury, and tell all exchanges to register as brokers, dealers, or exchanges.
The crypto community will scream and demand Congress exempt them. No one in Washington will listen any more. Do regulated US exchanges go bust and lose billions of customer funds? No. Any questions?<p>Crypto companies wanted special regulations for crypto, but it's too late for that. They'll probably have to become broker-dealers. Series 7 exams. Registered representatives. FINRA regulation. SIPC insurance. Audits. Compliance departments.<p>(I've had a US broker go bust when they were holding stock of mine. I got it out in about a week, after making a lot of phone calls.)<p>It's not the end of the crypto world. Gemini will probably become a regulated exchange. Maybe Coinbase.<p>[1] <a href="https://www.law.cornell.edu/uscode/text/15/chapter-2B" rel="nofollow">https://www.law.cornell.edu/uscode/text/15/chapter-2B</a><p>[2] <a href="https://www.natlawreview.com/article/sec-v-lbry-inc-sec-s-latest-crypto-victory" rel="nofollow">https://www.natlawreview.com/article/sec-v-lbry-inc-sec-s-la...</a>