Goldman Sachs published a research note on Friday covering blockchain technology and the recent demise of the crypto exchange FTX.

The investment banking giant believes regulation is “needed at the point of trust” within the centralized elements of the blockchain industry – rather than on the blockchain itself – to prevent similar instances of widespread fraud in the future.

Per the company’s report, FTX’s collapse does not represent a failure of the blockchain technology that served as a foundation for the tokens trading on its platform. The issue, it argued, is a lack of regulation covering the gatekeepers of the crypto world, such as exchanges like FTX.

According to Goldman’s note, the lack of existing rules for new financial instruments, like crypto, has created openings for widespread fraud greater than in other sectors. For example, fraud within the dot-com bubble at the turn of the century was relatively contained as it still took place within the equities market, which is well-regulated.

The bank stated that cryptocurrencies are still likely to flourish, but only if lawmakers wisely choose which elements of the industry to regulate. On one hand, blockchain-based financial instruments promising yield (ex. Anchor protocol’s 20% yield promise on UST) ought to be regulated like other securities. On the other, less regulation is needed within the decentralized finance (DeFi) arena, as smart contracts lack the counterparty risk of other centralized services. “This resolves the question of trust, the very thing regulation to safeguard investors would be intended for,” the bank said.