Crypto Assets Industry Bracing for "Winter Time" after FTX Collapse

Tokyo, Nov. 21 (Jiji Press)--The collapse of cryptocurrency exchange FTX Trading Ltd. has sent wide-spread shockwaves, with the crypto assets industry bracing for the arrival of a full-fledged "winter time."    In Japan, FTX's collapse is having a limited impact compared with in other countries as a series of virtual currency theft cases had prompted the strengthening of user protection systems. In the United States, however, some companies having close ties with FTX have fallen into financial trouble and have been forced to partially suspend their services.    FTX Japan K.K. has explained that it had net assets of some 10 billion yen as of the end of September this year and that it manages client assets separately from its own assets. Japan's Financial Services Agency, which oversees the crypto assets industry in the country, believes that the assets of users in Japan are protected.    Still, the Japanese unit of FTX is covered by the U.S. Chapter 11 bankruptcy scheme for which its parent has applied and it is uncertain how that will affect the withdrawal of assets by users in Japan.    The market prices of crypto assets, which once went sky-high, have recently been slumping, partly reflecting a tumble in May this year of stablecoins, or cryptocurrencies pegged to legal tender, with the industry widely said to have entered a winter period.    As if to add insult to injury, the collapse of FTX battered the crypto assets industry. The dollar-denominated prices of bitcoins dropped around 80 pct from last year's peak levels.    In the United States, financial woes spilled over to crypto-asset lenders and other related businesses. Some observers liken the industry's current situation to the 2008 Lehman shock, or global credit uncertainty triggered by the year's collapse of U.S. investment bank Lehman Brothers.    A crypto assets industry official said, "We still cannot see how far the impact (of FTX's collapse) will spread."    Investors in FTX include big-name investment funds and pension funds. Japan's Softbank Group Corp. <9984> invests nearly 100 million dollars in FTX.    If these companies' losses related to crypto assets swell, the supply of risk money is feared to diminish.    Noriyuki Hirosue, president of Tokyo-based virtual currency exchange operator bitbank Inc., said, "It would be inevitable for the (crypto assets) industry as a whole to decrease in size over a year or two." END