Here's how centralized exchanges aim to win back users after the FTX collapse
Centralized crypto exchanges play a huge part in the crypto trading ecosystem. However, the FTX collapse showcased how difficult it is to trust exchanges with user funds. Despite this, crypto trading platforms continue to believe that they can win back the community’s trust.
Speaking to Cointelegraph, executives from crypto exchanges OKX, Gate.io and Bitpanda shared their insights on how trading platforms can recover from the effects of the FTX debacle.
According to Dion Guillaume, an executive at Gate.io, transparency in terms of custody of user assets has become of vital importance. Guillaume told Cointelegraph that this also motivated their platform to open source their proof-of-reserves method using Merkle Tree verification to be available for other industry leaders to use. He explained that:
“I think over the last two weeks it's become more and more apparent that crypto exchanges need to operate with more transparency, especially with regards to the custody of user assets and Proof-of-Reserves.”Apart from this, Guillaume also believes that the industry will be able to recover in time. Pointing out other “black swan” events, the executive noted that the crypto industry remained resilient over the last decade. “The market may take some time to recover, but it will likely come back stronger than before,” he added.
Eric Demuth, the co-founder and CEO of crypto exchange Bitpanda, called on exchanges to prioritize customers and be more transparent. “They need to stop trying to sell a dream,” he said. Demuth explained that:
“We need to stop telling people to trust us and give them an actual reason to. Investors aren’t stupid, and they are now more suspicious of our industry than ever.”Apart from this, the Bitpanda CEO believes that the space will eventually recover from the effects of the FTX collapse. According to Demuth, there is no quick fix and the players that are left in the space must keep working toward a sustainable regulated and responsible future.
Related: CoinMarketCap launches proof-of-reserve tracker for crypto exchanges
Lennix Lai, an executive at crypto exchange OKX, also echoed the sentiments on transparency. According to Lai, transparency is important in rebuilding user trust. The executive highlighted that measures have to be taken both on the retail front and the institutional front.
In retail, Lai pointed out the importance of allowing users to self-verify that assets are 100% backed by reserves. On the institutional side, the executive noted that organizations must find ways to give clients greater visibility. He explained that:
“This self-verification feature means that even if we wanted to, there would be no way for us to comingle user funds since we are operating with complete transparency.”Apart from this, the OKX executive also highlighted the importance of self-custody. Lai noted that their firm believes in the motto “not your keys, not your crypto.” He said that the trading platform encourages users to self-custody their assets.