The Crypto Industry Struggles for a Way Forward After FTX Collapse

“For us, this is actually a great moment,” said Jeremy Allaire, the chief executive of the crypto payments company Circle. “We’re delivering real value, and the people who focused on building giant speculative trading casinos are not so happy.”

Binance operates essentially the same type of business as FTX, but Mr. Zhao, the chief executive, has recently been careful to differentiate himself from Mr. Bankman-Fried, calling his one-time rival a liar and criticizing FTX’s most dangerous practices. On Nov. 25, Binance announced a new “proof of reserves system,” promising to keep users informed about the amount of cryptocurrency in its accounts and to dispel fears that it might be vulnerable to the type of run on deposits that destroyed FTX. (But Binance’s plans were heavily criticized for lacking key information.)

Coinbase has also tried to alleviate fears of a collapse, publishing a blog post that said it always holds the same amount of money that customers deposited. “There can’t be a ‘run on the bank’ at Coinbase,” the post said.

Still, the mere existence of large companies like Binance, Coinbase and FTX is antithetical to the ideals of crypto, some industry experts argue. Since FTX’s collapse, some crypto enthusiasts have flocked to smaller firms in the experimental field of decentralized finance, which allows traders to borrow, lend and conduct transactions without banks or brokers, relying instead on a publicly viewable system governed by code.

But DeFi has its own problems, including vulnerability to hackers, who have drained billions of dollars this year from the experimental projects.

“They’ve based it on clunky technology that is very inefficient,” said Hilary Allen, a finance expert at American University. “They’re operationally very fragile.”

Scrutiny in Washington has also intensified. Gary Gensler, the chair of the S.E.C., has vowed to pursue crypto companies for violations of securities law. The House Financial Services Committee is scheduled to hold a hearing on Dec. 13 examining FTX’s collapse.