Andre Cronje former founder of DeFi project Yearn Finance, following the footsteps of FTX CEO, has also called for strict regulation of the crypto sector.
Andre Cronje, a renowned former founder, and developer of the decentralized finance (DeFi) project has reappeared after a protracted absence to urge for stricter controls on the crypto industry in light of the collapse of numerous companies this year.
The remarks reaffirm the thoughts expressed last week by FTX CEO Sam Bankman-Fried (SBF), who also demanded stricter industry standards for digital assets, including increased consumer safeguards, openness, and disclosures.
SBF, however, was faced with fierce community opposition, with many individuals charging the CEO with, among other things, attempting to dominate or censor the DeFi market.
Andre Cronje urged for further regulation of the industry in a blog post titled “The Crypto Winter of 2022″ on October 25. He noted that “the recent drop of the crypto-market has exposed the faults in the system and the necessity for legislation to reign in irresponsible actors and protect consumers.”
In addition, Cronje noted that 2018 had been a bad year for the cryptocurrency industry, citing the fall of the Terra LUNA ecosystem and other organizations, particularly the crypto lenders that have left customers in a state of shock:
“The resultant issues which appear to be most problematic are where users’ cryptocurrencies are locked in accounts handled by exchanges, or where the management of their funds is left in the hands of others.”
As he underlined the challenging situation of users obtaining their monies back from the ongoing Celsius bankruptcy case, he continued to demand more consumer protections, especially with regard to cryptocurrency exchanges and providers of cryptocurrency investing services.
“The existing regulatory framework’s available remedies are ineffective. In the lengthy terms and conditions of crypto exchanges, the majority of investors sign away their rights to their cryptocurrency, and many will (at best) rank as unsecured creditors should these exchange services be liquidated, he said.
The former DeFi developer outlines current traditional finance solutions that have not yet been adopted by the cryptocurrency sector, such as deposit insurance, prudential oversight, and consumer remedies that can be “addressed to the relevant prudential authority, or at least using overarching legislation as a framework.”
Regarding deposit insurance, Cronje stressed the significance of all central banks complying with regulations requiring insurance in order to protect client funds.
Contrary to Celsius, such activities typically imply that people have a workable and very simple path to recovering their money.
“The safety net of deposit insurance is a remedy available to consumers in traditional banking which is not available to depositors into crypto-exchanges (like Celsius),” he wrote.
Concerning prudential oversight, Cronje stated that broader regulatory bodies in the space might boost trust in cryptocurrencies, as in the case of central banks monitoring private banks for things like “capital, asset quality, soundness of management, profitability, liquidity, and sensitivity to risk.”
Due in part to his work on multiple additional DeFi protocols and the 2020 launch of Yearn Finance, Cronje is regarded as one of the DeFi movement’s most important individuals. He did, however, declare in March that he was quitting the business completely.
