Crypto is the cure for, not the cause of, financial shocks

FTX is simultaneously the biggest fraud and the culmination of the largest banking crisis in the history of the crypto industry. But the FTX debacle has very little to do with crypto itself. It is merely another episode in global finance’s long history of such catastrophes.

Despite extensive regulation and central bank activity, traditional finance is littered with shocks, panics, bank runs, and other disasters of which FTX is just the latest iteration. But unlike traditional finance, crypto offers a pathway to a sounder financial system. If crypto is going to deliver on this, the principles of decentralisation, immutability and verifiability need to be adopted by more centralised institutions.

Financial crises: symptoms of opaque fractional reserve banking system

Fraud is as old as humanity, and banking crises are as old as banking itself. But the ubiquity of such excesses has increased ever since banks evolved from depository institutions that held client deposits on reserve to fractional reserve banks.