The US crackdown on cryptocurrencies has increased the appeal of more friendly overseas hubs, such as Hong Kong and the UK. However, assuming that these locations can ignore the irregularities exposed in recent cases, including those involving FTX, Celsius, and Terra Luna, is unrealistic. The issue is not about blockchain technology but rather the prevalence of fraud. It is possible to debate whether the problem is due to a lack of legislation or just a lack of clarity, but the fact remains that any decisions must take into account the need to protect consumers from future meltdowns.

Two potential scenarios could emerge: the government provides legislation, the crypto industry adapts (which could take 3–5 years), or the government identifies irregularities and requests immediate adjustments. In either instance, the actors involved in the value chain, such as exchanges, custodians, and stablecoin providers, must act in advance or collaborate with the relevant institutions to protect the system. There is also a need for collaboration across the ecosystem to limit borderline behavior and irregularities, which currently seems lacking. Despite the irregularities that have come to light, the potential of blockchain technology and the opportunities that financial services can offer through tokenization remain.

The big question is how to reduce the risk associated with these new asset classes and the resilience of stablecoins in a new normal where increasing interest rates and inflation could erode present business models. While venture capital support may decrease following the irregularities of the past, consolidation is expected, and access to reserves will be required.

Nevertheless, the risk of new borderline tokenomics (token economics) models could create some cracks in the positive narrative. Ultimately, there is no quick fix for these problems. Politicians, financiers, investors, and regulators must all collaborate to strengthen their defenses and push for reform.

To reduce the risk associated with tokenization and protect consumers from future meltdowns, steps must be taken to strengthen the regulatory framework, increase transparency and accountability, and ensure that actors in the value chain adhere to standards for safe and responsible practices. This includes providing clear guidance for exchanges, custodians, and stablecoin providers and introducing measures to limit borderline behavior and irregularities. Additionally, greater collaboration is needed between financial institutions, politicians, financiers, investors, and regulators across the ecosystem to ensure everyone is on the same page. Finally, venture capital support should be monitored to ensure that it is used responsibly and not create an environment of risk.

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