Cryptos plans to regain its mojo after a terrible year

[ad_1]

The near collapse of the terra-luna stablecoin network in June and the insolvency of major crypto lender Celcius a few weeks later shook the nascent market. The price of bitcoin, the world’s largest cryptocurrency, is down over 60% in the past year, while Ethereum is down almost 70%.

Bacina, who was elected chairman of industry body Blockchain Australia earlier this month, declined to comment on FTX’s unpaid legal bill. But he acknowledges that the sector he now represents faces serious headwinds.

Given what has happened over the past few months, many companies will likely postpone or hold back [blockchain-related] projects like they did last crypto winter, he says.

TradFi trajectory

But he also says that many traditional financial services (known as TradFi in crypto circles) and professional services providers are quietly pursuing their adoption of Web3 technologies, even though they might be less eager to talk about it publicly than they do. a year ago when crypto markets were trading at all-time highs.

Smart businesses now understand the power of this technology and are increasingly engaging, Bacina says. They see how blockchain will soon disrupt their business models and how it provides opportunities to deliver more efficient services.

Piper Alderman is far from the only mainstream company supporting crypto. Blockchain Australia has major brands as members including KPMG, Deloitte, PwC and the Australian Securities Exchange.

Goldman Sachs was not only discouraged by the FTX saga, but the investment bank sought out discounted crypto companies amid the scandal, in order to double its exposure to the market, according to Reuters.

Goldman executive Rosie Hampson extolled the virtues of blockchain at the recent COP27 summit in Egypt, sharing her enthusiasm for Project Genesis, which uses digital tokenization to track the carbon emissions impact of green bonds for investors. investors.

Rather than triggering a massive withdrawal from the industry, FTX has instead allowed major mainstream blockchain projects to fly under the radar, Bacina says.

He points to Tennis Australia’s announcement that over 6,000 Australian Open Art Ball NFT holders will have access to free passes to the physical event in January, as well as a range of events and virtual experiences.

Provided fans with truly unique experiences and created memories that last a lifetime, said Ridley Plummer who holds the telling title of Senior Director of Metaverse, NFTs, Web3 and Cryptocurrency at Tennis Australia in a statement from press dated November 28.

Bacina also points to the Lygon project, of which it is a very small shareholder, alongside three of the four major retail banks (Commonwealth Bank, ANZ and Westpac). Lygon is moving the age-old process of bank guarantees (commercial contracts where banks guarantee that a customer can pay their debt) from a paper-based system to blockchain.

Lygon is exactly the kind of use case that unlocks significant innovation, he says.

Bank guarantees are not an exciting instrument. People like to talk about crypto and blockchain changing the world, increasing financial inclusion, or replacing banks, but ultimately there will be incremental improvements in various ways to make business run smoother, which is in itself very valuable.

Bank guarantee

While they’ve invested in Lygon to modernize back-end processes, the big banks’ relationship with the industry is apparently more thwarted. In a submission to the Treasury dated June and published this month, the Australian Banking Association revealed that its members have ambitions to participate in the crypto industry in a range of roles, including providing products and services. to meet customer demand.

The ABC went further in its own Treasury submission on crypto regulation, supporting the idea that there is great potential stemming from crypto assets and the distributed ledger. [blockchain] Technology. It indicated that it still plans to proceed with its controversial plan to allow customers to trade crypto assets through its banking app.

But rivals ANZ and National Australia Bank have ruled out any foray into crypto trading. ANZ’s Maile Carnegie told the Australian Financial Review Banking Summit in May that it would undo efforts to improve customers’ financial well-being.

In an unlikely alliance, major banks and the Australian Securities and Investments Commission, the corporate regulator, agree to ask the Albanian government to classify crypto assets as financial products. This would bring the crypto sector into the current financial services regime, rather than establishing a separate crypto-specific licensing regime.

A senior tech executive told the Financial Review that this was an effort by banks and the regulator to kill off crypto start-ups and control the blockchain, given that the sector would be subject to the infamously complex laws on financial services and the associated compliance costs. .

Maile Carnegie, an executive at retail group ANZ, has ruled out facilitating crypto-trading. Louie Douvis

Bacina says the industry is pushing for regulation and its introduction next year will bring certainty and help the sector rebuild its standing with the public. But he says these regulations must be fit for purpose. Blockchain Australia strongly opposed calls to classify crypto assets as financial products in its submission.

It’s concerning to see regulation by enforcement increasing in recent months, as it can chill and discourage regulatory engagement, push jobs and economic growth overseas, and expose customers, he says.

The comment is likely a reference to ASICs’ recent crackdown on alleged violations of licensing laws or disclosure by issuers of crypto products, including fund manager Holon and comparison site Finder.

Banks and financial institutions will fill the void created by the exit of FTX.

Jeremy Britton, Boston Trading Co.

A number of cryptocurrency exchange-traded funds have also been delisted, while Cosmos Asset Management, a local firm that has spent years trying to create crypto ETFs through Australia’s conservative legal and market systems , entered the administration. These events have further narrowed the options for local crypto investors and weighed on confidence.

But Jeremy Britton, Australian-born founder of global crypto fund manager Boston Trading Company, says he continues to see demand from institutional and wholesale investors. While retail investors have been spooked by the FTX saga, many professionals are still bullish on the sector, long-term, he says. And that includes the big banks.

I think more banks and financial institutions will fill the void created by the exit of FTX and other exchange or custody services, he says. Customers who are newly crypto-curious may trust the more established companies with their money and personal data rather than small, unknown or unproven start-ups.

The flow of venture capital to the sector also remains high. A total of $19.9 billion in capital has been deployed into crypto businesses this year, according to research house Pitchbook. Flows are expected to exceed the breakout year of 2021 (which saw $21.2 billion deployed), even as deal activity dries up in the fourth quarter.

Analysts are closely watching the impact of the FTX saga on short-term investment appetite. At least some of the local crypto businesses will be getting a Christmas card.

[ad_2]