City Comment : There is something of the Fyre Island festival debacle about the downfall of crypto platform FTX. Like the 2017 scandal, there is a backdrop of sun kissed silver beaches - FTX operated largely out of the Bahamas - an apparently credible charismatic 30 year old entrepreneur running the show; a sprinkling of celebrity star dust - Tony Blair and Bill Clinton will surely forever regret sharing that panel with Sam Bankman-Fried - legions of ready investors, and of course a spectacular collapse once the Emperor’s shining new clothes had been exposed for what they really were.
In a wide ranging speech on the future of crypto today Sir Jon Cunliffe, Bank of England Deputy Governor for Financial Stability, made a different analogy - with the dot-com crash. He made the reasonable point that “the bursting of the dot.com bubble in the early years of this century did not herald the end of the development of internet commerce though it took longer than its original enthusiasts imagined and emerged in a very different form, dominated by big tech platforms.”
He’s right and crypton is surely here to say but as we know, the past is a very unreliable guide to the future. What does seem clear is that the “wild west” unregulated phase of crypto appears to be coming to an end. The crazy eyed early adopters who treated the currencies almost as cult followers will be eased out by grey suited regulators much like Sir John. Sadly that will be too late for investors who threw their money at FTX - and indeed the Fyre Island festival - back in the day.
