May 28, 2023

Andre Cronje: “Crypto industry must implement deposit insurance”

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Andre Cronje: “Crypto industry must implement deposit insurance”

Andre Cronje, founder of Yearn.Finance, Keep3r, and Solidly, said that the recent downturn in the crypto market has shown the need for regulation due to “irresponsible” companies.

Andre Cronje urged regulators tostrengthening the protection of users of crypto exchanges and DeFi platforms, citing the difficulties in recovering assets experienced by users of the bankrupt company Celsius.

“Remedies under the currentregulatory regimes are ineffective. The policy of most crypto exchanges forces investors to give up rights to their assets. As a result of the platform’s bankruptcy, at best, they will be considered unsecured creditors,” he said.

Cronje believes that the crypto industry mustimplement deposit insurance, prudential supervision and consumer protections to protect users. In this case, in case of bankruptcy of a cryptocompany, investors have “the opportunity to apply to the relevant prudential authority or to the court.

“Deposit insurance is a tool available to consumers in traditional banking that is not available to users of cryptocurrency exchanges,” Cronje said.

He stated that oversight bodies in the sector canincrease confidence in cryptocurrencies. Thus, central banks supervise private banks in relation to factors such as "capital, asset quality, sound management, profits, liquidity and risk sensitivity".

Recall that earlier the founder and CEOFTX exchange director Sam Bankman-Fried warned politicians against passing laws that could negatively affect decentralized finance.