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Cautious crypto companies cautiously return to Davos

A resilient group of top crypto executives returned to the World Economic Forum in Davos but without their signature swagger, suggesting that the spectacular failure of trading platform FTX has rocked the industry.

At the WEF’s previous Alpine gathering in May, crypto operators grabbed the top slots on the busy main street leading to the convention center, leaving attendees with little space to avoid hard selling of tokens and digital art.

But a price drop, a spate of bankruptcies, and allegations by US law enforcement that the now-defunct FTX crypto platform committed one of the “biggest frauds in American history” have forced the industry to play it safe.

“That’s a big difference from May,” said Brooks Entwistle, executive director of the Blockchain-based payment company Ripple. “Last time, crypto dominated the boardwalk. It was everyone you know, every company you know. Now a lot of people aren’t here anymore.”

Cautious crypto companies cautiously return to Davos, Crypto Trading News

The period between May and January has been “traumatic,” Entwistle said, increasing the sensitivity of regulators and central banks to deepen ties with crypto operators, even those working on accurate payment systems and legitimate central bank digital currencies, rather than them get rich quick coins.

Ripple itself is awaiting the completion of a long-running US regulatory investigation into its XRP token, which has been identified as a possible unregistered security. Entwistle expects this process to be completed in the first half of this year and that his company is still in growth mode.

But the legal charges against FTX and its disgraced founder Sam Bankman-Fried hang heavily over every operator left in this space. “Everyone’s a little bit paranoid,” Entwistle said. “FTX takes up the first 30 minutes of every call.”

Even despite the failure of the Terra and Luna tokens in early May 2022, crypto executives were elated at the event later that month, with many trying to find buyers for their coins. Around half of the shop fronts on the Davos Promenade were crypto-related. A panel discussion at the convention center itself was titled “The Future of Crypto: The View from Miami” with the city’s mayor. A number of pop-up galleries contained non-fungible tokens or NFTswhose value has gone up in the last nine months.

tetherthe one called stablecoin operates and claims to be backed one-for-one with dollar reserves, gave out free slices of pizza. In January there was no obvious sign from the company. Other no-shows are the network polka dots and FTX itself. Most of the marketing is heavily focused on the humdrum world of payments and potential applications for Crypto’s blockchain technology.

Binance CEO Changpeng Zhao spoke at a side event, but only remotely. A roughly half-hour interview hosted by blockchain firm Casper Labs shed some light on hard-hitting questions for the head of the world’s largest crypto exchange, and the interview soon turned to his food and music tastes.

“I try to listen to all the bands that are into Crypto,” Zhao revealed, adding that he “likes almost any type of food.”

Stablecoin and payments specialist Circle had a strong presence but tread cautiously. “Now is a moment to really try to differentiate a lot of things,” Chief Executive Jeremy Allaire said at an event hosted by the FT. “I can distinguish between people speculating on ‘shitcoins’ and meme coins from permanent public infrastructure being built on the internet. There’s a hot mess of stuff that’s been cooked. We have to focus on the benefit.”

Bank executives also underscored the distance between their operations and some of crypto’s more imaginative and fragile elements. Robin Vince, BNY Mellon’s newly appointed chief executive, said his bank will stick with its digital asset units. But, he pointed out, “crypto is a tiny part of it.”

Instead, he is interested in blockchain technology. “[That technology] is not proven. But over the next few years, it’s likely to get very interesting. Maybe five years, maybe a decade. We need to see it prove itself a bit more, but if it’s going to be a new, better way of keeping records of financial instruments, we’re the world’s largest custodian. We absolutely must be a part of this journey.”

Crypto optimists largely agreed that potential coin buyers or users of the technology have short memories and that the market can recover.

Lending some weight to this claim was a lighted display on the boardwalk by an outfit called Crypto Castle. “Escape the hell of bank and government control,” it read. “To a royal home for cypherpunks.”

Additional reporting by Scott Chipolina

Source: Crypto News Deutsch

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