DAVOS, Switzerland, Jan 19 (Reuters) – The winter chill was felt in the air of the Swiss ski resort town of Davos, as attendees of the World Economic Forum (WEF) saw the effects that crypto winter had on the digital asset industry.
The Promenade, the main street of the resort, was once lined with storefronts of cryptocurrency firms that catered to the bitcoin traders. Now, only a few remain, and the ones that did come had to tone down their casual attire, donning blazers instead of hoodies.
The WEF quickly distanced itself from the crypto craze, as the sidelines of the meeting were filled with digital industry professionals discussing the true value of blockchain technology, the potential disruption it may cause to financial services, and the importance of proper regulation.
“I expect there will be more of a focus on utility value and practical applications of the technology, and less focus on retail investors looking for meme coins,” said Jeremy Allaire, CEO of USDC stablecoin issuing Circle. “There was a lot of nonsense,” he added, speaking to The Reuters Global Markets Forum.
Raghuram Rajan, former Reserve Bank of India governor, also echoed the sentiment, suggesting that investors focus on the true value of the technology and not on digital assets’ decline last year. “We are in the right place now in terms of crypto,” he stated.
Executives in Davos focused on the infrastructure of the blockchain, and how it can be used to create new jobs. “We are an infrastructure, a plumbing game. We build infrastructure today for digital assets, which are cryptocurrencies. Tomorrow they will be different assets,” said Dmitry Tokarev, chief executive of Copper, which offers custody services. “I would question some of the things I saw, ‘What’s the return on that?’” he added.
The WEF meeting was extraordinarily well-organized due to the large number of crypto companies present, who have been hit hard by the winter freeze. Since May, investors have retreated from more risky assets due to falling cryptocurrency prices, the closure of major crypto companies, and the interest rate environment. “We have always been ignoring the noise. All our partners were here last year. They are here this year,” Tokarev said.
The cryptocurrency industry has taken a hit in the last couple of years, with the market capitalization dropping by an alarming $1.4 trillion. This is only a third of its peak in 2021. Many of the leading crypto companies have been left reeling and some have had to shut down operations.
The executive director of the Stellar Development Foundation, Denelle Dixon, noted that real use cases need to be given more attention. The chairman of Swiss UBS, Colm Kelleher, commented during a World Economic Forum panel that blockchain technology could reduce bank costs. He also added that the industry had “dodged a bullet” as the collapse and rise in value of crypto had not created systemic problems.
Yat Siu, co-founder of Hong Kong-based Animoca Brands, which develops blockchain-based games, said that these companies have serious cash positions and are multi-billion dollar companies. Anthony Scaramucci, founder of SkyBridge Capital, stated that the WEF was a reliable and established platform.
Despite the losses in the past year, Scaramucci remains bullish on cryptocurrencies. However, visible signs of the industry losing its swagger were seen at Davos, as a bright orange Mercedes with a Bitcoin symbol and the slogan “In Bitcoin We Trust” was parked outside the blockchain pavilion.
Reuters is providing daily updates from Davos. Additional reporting by Lananh Nguyen, Stefania Spezzati and Lisa Mattackal, edited by Alexander Smith.
