| > For all practical purposes at this point in time, if you don't assume your exchange is lying about their reserves and at high risk of a run you're in for a massive loss. I'm a cryptocurrency advocate and I agree. This is why users should 1) never put more funds at risk in an exchange than they are willing to lose (at least, not at the same time), and 2) should demand Merkle-tree based proofs of crypto reserves, like the Kraken exchange has done out of their own initiative, or some other kind of proof of crypto reserves by cryptographic signature and 3) should demand periodic financial audits of their exchanges from reputable financial auditing firms (not the clown show that FTX's financial auditor was, which had offices... IN THE METAVERSE). Points 2) and 3) are not infallible (especially because exchanges can get hacked) which is why point 1) is so important. I also think that crypto exchanges should require new customers to pass a relatively strict test about crypto, investment and trading basics, before they could start operating with cryptocurrencies or with any other such trading products. Especially since crypto exchanges are the most common onboarding vector for new crypto users. Because it's obvious that many crypto users do not know what they're getting into and all the risks that they are taking. > I am heavily against crypto, but I will be the first to point out the decentralization purists were right: not your keys, not your coins. If you're going to play this game, putting complete trust in mostly unregulated entities who have conflicting self-interests from you...yikes. Agreed, although I would nitpick in that by itself, regulation is hardly a guarantee that the risks have been eliminated. In fact, many bank failures and financial crisis, for example, have happened despite massive regulations. Also, many regulations are pointless burocracies or even have massively detrimental and/or have unintended consequences in many ways, such as limiting competition unnecessarily, promoting inequality and unfairness by preventing savvy investors (with non-massive amounts of funds) from being able to invest, etc, etc, etc. But yes, in general I agree with you and I think more transparency for crypto exchanges is definitely needed and maybe should even be required by regulation, given that most exchanges are not doing it themselves out of their own initiative (even though it would be in their collective best interests in the long term). |