DAVOS, Switzerland, January 19 (Reuters) – In the snow and ice on the main road in Davos, the impact of the crypto winter is clearly visible to WEF participants.
Last May, the dressed-up storefronts along both sides of the Promenade Street that runs through the Swiss ski resort were dominated by crypto firms rolling in bitcoin.
Now only a handful remain, and the executives who have reached Davos have traded their hoodies for blazers, despite the sub-zero temperatures outside.
Some of those from the digital industry who have settled on the fringes of the World Economic Forum (WEF) annual meeting quickly distanced themselves from cryptocurrencies.
“I hope there will be more focus on utility value and practical applications of the technology, and less focus on private investors chasing meme coins,” said Jeremy Allaire, CEO of USDC stablecoin issuer Circle.
“There was a lot of nonsense,” Allaire told the Reuters Global Markets Forum.
Former Reserve Bank of India governor Raghuram Rajan believes last year’s plunge in digital assets allows investors to focus on the technology’s real value.
“We are now in the right place in terms of crypto,” he said.
Executives in Davos said it’s now all about blockchain technology, proper controls and regulation, and the promise of disruption it holds for financial services and beyond.
“We are an infrastructure, plumbing game. We are building infrastructure today for digital assets, that is crypto. Tomorrow it will be other assets,” said Dmitry Tokarev, CEO of Copper, which provides custody services.
“I would question some of the things I saw, ‘What’s the return on that?'” added Tokarev, referring to the large presence of crypto companies at the last WEF meeting, which was unusually held in May due to the Covid19 pandemic.
“We have always ignored the noise. All our partners were here last year. They are here this year,” added Tokarev.
The world of digital assets has changed dramatically since May, with the value of the crypto market plummeting and some of the major crypto companies going under as investors pull away from riskier assets in the face of rising interest rates.
Cryptocurrency market cap has shrunk by $1.4 trillion, a third of its value from the peaks reached in late 2021, and some of the best-known crypto companies are under pressure or have gone bankrupt, including the crypto exchange collapse ftx.
“There is a place for trading use cases, but they can’t be the only focus, we need to get to more real use cases and pay attention to that,” said Denelle Dixon, CEO of Stellar Development Foundation, which is the Stellar blockchain supports.
‘DODGE A BULLET’
While interest in the technology continues, the conversation is about responsibility.
Colm Kelleher, chairman of Swiss bank UBS (UBSG.S), told a WEF panel that blockchain technology will help reduce costs for banks. But he said the industry needed to figure out the basics, such as anti-money laundering controls.
“We dodged a bullet,” said Kelleher, pointing out that the collapse in the value of crypto currencies had not caused any systemic problems. “We had investors who did want to invest in coins. And we had to draw a line on what was appropriate for those investors,” he added.
Yat Siu, co-founder of Animoca Brands, a Hong Kong-based blockchain gaming developer, supported the Davos companies.
“These are companies with serious cash positions and revenue-generating businesses,” Siu said. “They are billion-dollar companies.”
Crypto is trying to establish its presence, SkyBridge Capital founder Anthony Scaramucci said, adding “there is nothing more established than the World Economic Forum.” Scaramucci maintains a bullish stance on crypto despite losses last year.
Back on Davos Promenade, some signs of crypto’s lost swagger persist.
A bright orange Mercedes was parked just outside a pavilion promoting blockchain early in the week.
On the hood, instead of the car manufacturer’s emblem, there was a copper-colored symbol for bitcoin.
The tapes featured a slogan in white: “In Bitcoin we trust”.
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Additional reporting by Lananh Nguyen in Davos, Stefania Spezzati and Lisa Mattackal; Edited by Alexander Smith
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