While some regulators are already comparing the FTX collapse to Lehman Brothers’ in 2008, it is in some ways different – for starters, large financial institutions’ exposure to FTX is relatively limited, as is household exposure.
Crypto’s expansion has generally been financed by venture capital, together with sizable amounts of retail investors’ money from a relatively small pool of traders. When institutional investors have piled in, they’ve largely stuck to allocating single-digit percentages of their funds, as has been the case with the pension funds caught in the collapse.
The damage to crypto’s reputation and chances of mainstream adoption, however, is likely to be profound, with some worrying whether FTX’s demise will be crypto’s coup de grace.
Regulators are wasting no time stepping in. A Reuters report, citing sources familiar with the matter, said that the SEC, among other regulators around the…
