Speaking with CryptoSlate, the CEO of KuCoin Johnny Lyu, stated that the collapse of FTX was a “huge blow to the entire industry” but that.
“Institutions and exchanges are all willing to extend a helping hand for this crisis to go away as soon as possible so everything can return to normality again.”
Lyu reiterated that KuCoin’s proof of reserves and third-party audits were released in response to growing market concern about other exchanges’ stability.
Akiba questioned his opinion of third-party providers for the custody of assets within centralized finance (CeFi) and whether KuCoin believes this to be the best way forward. Lyu explained that
“For the traditional finance industry, saving and transactions are actually separate from one another – money is put into the banks, but transactions are actually conducted on an independent platform”
On the other hand, “crypto it’s different because exchanges provide the infrastructure.”
“I think in the future, if there are service providers, that can provide very professional asset custody service to the users, and they are reliable, and credible, we are more than willing to cooperate with them.”
Akiba continued by asking Lyu whether this shift of focus towards asset custody will bring about swifter regulations when it comes to centralized exchanges.
Lyu explained that any sovereign country “with established financial industry would consider two things when issuing regulatory policies:
“First the safety of the assets, and second, existing rules of a given industry so that we can ensure that the user’s rise in interests are protected to the maximum and they would not suffer from losses as a result of malignant intentions.”
Lyu went on to explain that KuCoin is “very active and supportive of licensees,” that they are “very proactive in complying with local laws and regulations,” and that KuCoin is “willing to stay communicated with the regulators.”
Akiba then questioned the current financial position of KuCoin, requesting confirmation that KuCoin is fully liquid, that user assets are safe and withdrawable, and that users should have no concerns or issues moving forward.
“I can confirm that we’re fully liquid and we are also publishing our asset status right now. As I mentioned, we are also collaborating with the third-party auditors right now.”
Lyu continued by explaining that “our sector is highly differentiated from [the] traditional finance sector…it is changing so rapidly that regulations can barely keep up.”
“I think every time a crisis occurs, it also gives rise to a lot of opportunities. So I think after this, we will see […] a boom of the third-party auditing agencies that can provide professional services such as […] proof of reserves, and even endorsement.”
Lyu concluded by stating that “…being preemptive with sufficient knowledge is always the better strategy” and that “everyone needs to make our due contribution for the healthy development of the industry, including the users.”
