Andre Cronje: “Crypto industry must implement deposit insurance”

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The founder of the Yearn.Finance, Keep3r and Solidly projects Andre Cronje said that the recent decline in the crypto market showed the need for regulation due to “irresponsible” companies.

Andre Cronje calledregulators to strengthen the protection of users of crypto exchanges and DeFi platforms, citing difficulties in returning assets that users of the bankrupt company Celsius experienced.

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

Cronje believes that the crypto industry mustintroduce deposit insurance, prudential supervision and consumer protection measures to protect users. In this case, if a crypto company goes bankrupt, investors have “the opportunity to appeal to the relevant prudential authority or court.

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

He stated that the sector's supervisorscan increase confidence in cryptocurrencies. Thus, central banks supervise private banks with respect to factors such as “capital, asset quality, management strength, profitability, liquidity and risk sensitivity.”

Let us recall that previously the founder and generalFTX Exchange Director Sam Bankman-Fried warned policymakers against passing laws that could negatively impact decentralized finance.