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What steps should be taken to prevent future collapses of cryptocurrency exchanges like FTX?


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Since the collapse of FTX, it's no doubt that a lot of investors are skeptical to invest their funds on centralised exchanges. I don't actually blame them because investors are mostly concerned about the security of their funds. After the FTX incidence, here are what I think could be done to avert future occurrence of similar scenario

Regulation of CEX: The regulation of centralized exchanges would surely bring checks and balances to the crypto space as the exchanges won't be able to take any irresponsible act of using customers funds carelessly and unjustly. Regulation of the exchanges doesn't mean users must do KYC coz am aware alot of users may not want to be KYCed but the exchanges should be accountable to a regulatory body but obviously not SEC.

Declaration of POR/CPF: Exchanges must be mandated to publicly declare their proof of reserve (POR) and customer protection fund (CPF) just like Binance and Bitget did. This will give users assurance and safety of their funds. These two things are like a transparency test that put the users in the know and give them sense of belonging. So if this can be achieved, am very optimistic it will be difficult to experience future collapse of any exchange.

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I think it all comes down to proper oversight and policies. Steps like strict regulatory compliance, adequate protection funds (as with Bitget's $300m protection funds) risk management practices, updated tech systems etc – must be in place, that way exchanges get equipped beforehand to avoid the ugly incident on FTX 

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