KPMG: Crypto collapse 'necessary evil' on the way to maturity | Crypto

KPMG: Crypto collapse ‘necessary evil’ on the way to maturity

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-The crypto crash over the summer was the market correcting itself after a lot of leverage mixed in with bad actors needed to be fleshed out, said KPMG in Canada’s director and co-leader of crypto assets and blockchain Kunal Bhasin.

-The Terra Luna collapse and the contagion risks that led to the crypto selloff were “the necessary evil for the industry because there were a lot of bad actors,” Bhasin told Kitco News on the sidelines of the Blockchain Futurist Conference in Toronto.

-But coming out of this, there’s going to be a lot more maturity in the space, Bhasin said. “We saw the level of maturity that the space got after the 2018 cycle and the infrastructure that was built to address all of the challenges. The maturity of the crypto custodian infrastructure, crypto wallets, and how we interact with it. We’ve seen tremendous improvement over the last three years. And that’s what I expect coming out of this.”

-Risk management frameworks are likely to get an update to address the risks that were overlooked before, he added.

-KPMG Canada is a professional services firm that added Bitcoin and Ethereum to its corporate treasury at the beginning of the year. And the firm continues to hold that allocation, Bhasin said.

-Regulation has been front and center this summer as U.S. regulators are stepping up their oversight of the crypto industry following the price collapse.

-According to Bhasin, countries have a lot to learn from each other when setting out regulations, especially since crypto is a global system.

-Overall, regulations are a good thing for the industry they offer protection to consumers and investors. However, international cooperation will be important because siloed regulations will be detrimental to the system, Bhasin added.

-Bhasin also believes that the traditional Howey Test might not be the right one for the crypto space, especially regarding Bitcoin and Ethereum.

-Institutional involvement in crypto continues to grow, and the price drop could encourage some new players to get involved.

-KPMG is keeping a close eye on the Ethereum Merge. “At KPMG, we are all about being sustainable and ESG compliant. For us, keeping a close eye on the Merge is critical because it’s going to move from proof-of-state to proof-of-work and reduce the emission by 99%,” Bhasin said.

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