So, now that we have a few names that have fled Japan over these regulations that are now proven to protect customers, won't this be a good time for users to drop them? I remember a guy that shouts #SAFU all day but when it came to obeying these laws it choose to #RANU
That insurance is an expense many companies don't want to have. Even more, the crypto space used to pretty much cheer for not obeying regulations, which most often came with compulsory KYC (which now is pretty much a rule, but not so long ago it was the exception).
Binance was hacked and managed to recover from their own funds. This gave CZ quite a morale boost and few understand that those funds are good only in case of hacks, but won't help in case of bankruptcy, especially if that's due to running on fractional reserves.
FTX collapse was basically all regulators needed to justify stricter rules.
Exactly.
So the author is already suggesting that all exchanges should be forced to pay for an insurance for user funds. How many exchanges can pay for that? So small exchanges are now doomed, and only big ones such as Binance, Coinbase, FTX, etc will be able to operate if those rules apply everywhere.
I was proposing insurance for exchanges many years ago. Back then most insurers didn't even know how to handle crypto businesses.
The insurance value is meant to be proportional with the size of the exchange / a median amount of funds deposited there. So in theory it should be affordable to the smaller exchanges too. Just most won't want to spend that money.
Insurance is imho okay. But I fear that the result will be stricter regulations for the users, not for the exchanges, and in many cases, while some other crazy regulations may come to life, the insurance may go "forgotten". I'm saying this because the exchanges can just go to softer jurisdictions, while many of the users can't.