Consensus 2023 Logo

Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.

CoinDesk - Unknown

Will Canny is CoinDesk's finance reporter.

Consensus 2023 Logo

Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.

The bankruptcies of crypto exchange FTX and its affiliated trading firm, Alameda Research, are major blows to the cryptocurrency industry’s credibility, but there are silver linings, Bank of America (BAC) said in a research report Friday.

“An increased urgency for regulation may enable greater institutional engagement, and a shift in focus (and capital) from speculative trading to projects with real-world functionality and companies with road maps to profitability may accelerate industry maturity,” analysts Alkesh Shah and Andrew Moss wrote.

Regulatory frameworks for the crypto industry are critical for mainstream adoption, the report said, and a coordinated global effort is required to discourage regulatory arbitrage and to safeguard consumers and investors.

FTX’s collapse has refocused attention on the need for regulation that “creates a transparent legal framework for digital assets; fosters technological innovation; provides consumer and investor protections and mitigates financial stability risks,” the note said.

The bank noted that the top 100 crypto tokens have fallen 64% year to date, but pointed out they are still up 2,175% since the end of 2016. The cost of ignoring digital assets is high, it said.

The development of blockchains that are smart contract-enabled and applications with real-world use has accelerated this year, the report said. Speculative trading may be widespread, but it's the “underlying blockchain technology driving this speculation that could be revolutionary.”

Bank of America said that “retail and institutional disengagement” could further pressure crypto prices, but noted that digital-asset prices fell 22% between Nov. 2 and Nov. 10 before rising 6% through Nov. 25, which shows that investors may be moving on and are focused on blockchain technology’s long-term disruption potential.

Sign up for Money Reimagined, our weekly newsletter exploring the transformation of value in the digital age.

By signing up, you will receive emails about CoinDesk product updates, events and marketing and you agree to our terms of services and privacy policy.

DISCLOSURE

Please note that our

privacy policy,

terms of use,

cookies,

and

do not sell my personal information

has been updated

.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a

strict set of editorial policies.

CoinDesk is an independent operating subsidiary of

Digital Currency Group,

which invests in

cryptocurrencies

and blockchain

startups.

As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of

stock appreciation rights,

which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG

.

CoinDesk - Unknown

Will Canny is CoinDesk's finance reporter.

Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.

CoinDesk - Unknown

Will Canny is CoinDesk's finance reporter.