Post-FTX Crypto Governance Reforms: Restoring Institutional Trust and Reshaping Blockchain Asset Valuations

The collapse of FTX in late 2022 sent shockwaves through the cryptocurrency market, exposing catastrophic governance failures and eroding institutional trust in crypto leadership. According to a report by the Corporate Governance Institute, the event was marked by "compromised systems integrity, faulty regulatory oversight, and inaccurate bookkeeping," all exacerbated by a culture of unchecked growth under Sam Bankman-Fried, as described in a Systemic risks study. This governance breakdown triggered a chain reaction, destabilizing interconnected platforms like BlockFi and Genesis and causing major cryptocurrencies to plummet in value, according to the CLARITY and GENIUS guide.

The Erosion of Institutional Trust

Event studies conducted in 2024–2025 revealed that the FTX collapse led to negative abnormal returns for most top 10 cryptocurrencies by market capitalization, particularly in the days preceding and following the event, according to an event study. The resulting panic prompted mass asset withdrawals and a measurable shift in trust dynamics. For instance, users migrated from centralized exchanges (CEXs) to decentralized exchanges (DEXs), with a notable decline in wrapped Ethereum (WETH) prices and increased NetFlow to DEXs, as shown in a Trust Dynamics study. This migration underscored a broader skepticism toward centralized governance models and accelerated demand for decentralized alternatives, as that Trust Dynamics study observed.

Institutional trust erosion was further amplified by the lack of regulatory safeguards. A 2025 study published in Systemic Risks in the Cryptocurrency Market noted that the FTX crisis did not generate higher systemic risks than previous crypto shocks, but it deepened investor wariness about corporate governance practices. This wariness persists, with institutions now prioritizing platforms with transparent leadership structures and robust compliance frameworks, a trend the Trust Dynamics study also documents.

Governance Reforms and Regulatory Clarity

Post-FTX governance reforms in 2025 have sought to address these vulnerabilities. The GENIUS Act, signed into law in July 2025, established a federal framework for payment stablecoins, requiring them to be backed 100% by high-quality liquid assets like U.S. dollars or short-term Treasurys, as discussed in the CLARITY and GENIUS guide. This act also introduced a dual-tiered regulatory structure, with larger stablecoin issuers (over $10 billion in market cap) subject to federal oversight by the Federal Reserve, detail provided in the CLARITY and GENIUS guide.

Complementing this, the CLARITY Act clarified jurisdictional boundaries, assigning the Commodity Futures Trading Commission (CFTC) oversight of most digital assets while retaining the SEC's anti-fraud authority, a distinction explained in the CLARITY and GENIUS guide. These reforms have enhanced market stability, enabling financial institutions to explore blockchain-based solutions for payments and cross-border transactions, as the CLARITY and GENIUS guide outlines.

Impact on Blockchain Asset Valuations

The regulatory tailwinds have directly influenced blockchain asset valuations. For example, Ethereum (ETH) outperformed Bitcoin (BTC) in 2025, reaching an all-time high of nearly $5,000 as the CLARITY Act reinforced its role in DeFi and stablecoin infrastructure, according to the CLARITY and GENIUS guide. U.S.-listed spot Ether ETPs saw $3.9 billion in net inflows in August 2025, reflecting strong institutional demand, as the CLARITY and GENIUS guide reports.

Data from Citi's 2025 Outlook highlights that Bitcoin ETFs alone attracted $36.4 billion in net inflows by late 2024, driven by macroeconomic factors and growing institutional adoption. Meanwhile, digital asset treasuries (DATs)-public companies holding crypto on their balance sheets-purchased significant quantities of ETH and BTC in August 2025, further stabilizing prices, a trend summarized in the CLARITY and GENIUS guide.

Challenges and Future Outlook

Despite progress, challenges remain. Regulatory ambiguity in areas like token classification and cross-border compliance persists, as noted in a 2025 analysis by GT Law and summarized in the CLARITY and GENIUS guide. Cybersecurity vulnerabilities and the potential for systemic risks if governance frameworks are not universally adopted also linger, a concern Citi highlights in its 2025 Outlook. However, the maturation of DeFi platforms, tokenization of real-world assets, and integration of AI with blockchain technology are expected to refine valuation models, as discussed in Citi's analysis.

The FTX collapse served as a catalyst for rethinking centralized trust systems. As institutions recalibrate their risk appetites, the interplay between governance reforms and asset valuations will remain a critical focal point. The 2025 regulatory landscape, while still evolving, has laid the groundwork for a more transparent and resilient crypto ecosystem-one where institutional trust, though shaken, is gradually being rebuilt.