Though the collapse of FTX took away the confidence of many crypto investors and traders away from centralized exchanges, I think it was a blessing in disguise because the collapse actually birthed the introduction of user protection fund from some top exchanges to keep their customers and give them some level of confidence that such a scenario that befell FTX is properly guided against.
In this space, we know security is of essence and after several failure from some cex ranging from either hacks, scams from the CEO and other forms of manipulations, it has become increasingly difficult for some investors to trust exchanges despite the fact that this exchanges play a huge role in the crypto landscape.
Do you think the introduction of user protection fund can reinstate the confidence of investors back to CEX
Big words with no substance.
1. SAFU, proof of reserves and other similar funds are still under CEX control, hence they can use them for other stuff - from good old "losing private keys" to newer use of those same funds to back other loans and businesses (as many as possible), i.e. they provide absolute 0 protection to customers.
2. The vast majority of day traders will still use CEX, as long as it accepts them, has very low fees and very high liquidity. history has shown that most don't really care about being safe/backed up.
3. Nowadays people tend to be a little bit more careful with their IDs (but we are still far from where we should be), plus CEXes tend to do inside trading, delisting coins for unclear reasons, ask overly high fees at withdrawals and for that more people start to avoid them. But they (CEXes) are not in danger yet.
However, the protection talk is pretty much worthless imho. Sorry.