This Is Not Crypto's 2008 Lehman Crisis Moment. It's The Moment That Saves Us From A Situation Like The 2008 Financial Crisis

News media(as usual) as well as people in the community have been freaking out, questioning if this is the time when crypto will fall into a deep dark winter. People are thinking that the fall of the second largest crypto platform will pull the rug out from under the entire industry. This is not so. This is actually the moment that saved us from a Lehman Crisis.

The Lehman Crisis and 2008 GFC was caused by

1. blind faith in financial institutions that borrowers were properly audited to ensure they are fully capable of repayments
2. regulators incapable of proper oversight to prevent points-of-failure
3. banks so greedy as to sacrifice their entire organizations future over some short-term profits
4. deposited funds are held securely and are fully backed by banks.

Crypto and time fix the first three points. Crypto by itself usually has over-collaterlized loans such that you may only borrow less than the collateral you issue so as to mitigate any failure to repay. This is as long as you aren't borrowing any illiquid or 'brown' coins with which to manipulate markets and profit a la Moolah Finance and Mango markets. We then have Defi that allow you to take full control of your funds. This collapse has taught us not to blindly trust any institutions, whether they be a bank or those who proclaim to save us from banks. And then regulation is coming whether we like it or not, and I imagine quite a few of us would have changed our opinion on it with recent events.

Defi pretty much solves all these issues for the most part, however some may still want to stick to Cefi, due to lack of ability or education to manage and secure our own funds as well as lower fees and simple convenience. Even for Cefi, things are getting better. Binance and Crypto.com have committed to proof-of-reserves audits. The people at Kraken already provide proof of reserves, which should show you that, while they may not be infallible or perfect, should show you where their priorities lie. Bitmex as of yesterday provided a snapshot of theirs. OKX and Kucoin say their proof-of-reserves will be ready in a month. This list also includes Gate.io, Poloniex, Bitget, Huobi, Deribit and Bybit who have all made separate statements to provided merkle tree-based(a tree like data structure in computer science) proof-of-reserves. We are also pushing toward live PoR rather than snapshot-based ones. These are meant to show and give full transparency that all tokens/coins deposited on the platform are fully backed funds that are present and held by the platform. This solves the last problem I outlined. This collapse has just made things simpler. Don't invest in any exchange that does not provide audit proof-of-reserves. Admittedly, proof of liabilities is also needed for full trust but Gate io, Kraken and Coinbase have already published these that puts pressure on the rest of the industry to step up.

So one day, Kraken was alone in providing this and now we have 11 of the largest exchanges following suit thus far. If this is not an entire industry shift for the better, I don't know what is. The fall right now may be hard, but it is saving us from bigger falls in the future.

Now granted, this does not solve the problem of price volatility, which would be sorted out as more people get into crypto with its growing acceptance. The prices then will no longer jump by large fractions of a percentage as there will be more people buying in-between those prices that stabilize it. We will also be more sure of its fair value as crypto is actually implemented into its use cases. But this is not crypto's Lehman moment, this is the moment that saves us from reaching that point.