Kraken MD Talks CBDC, FTX, and Crypto Winter Expectations

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Blair Halliday is the UK Managing Director of Kraken, one of the world’s leading crypto exchanges. As the crypto winter lingers on and the market experiences continuous changes and events – such as the fall of FTX – we asked Halliday for his views on the latest crypto developments, CBDCs and the state of DeFi in 2023.

You are the UK Managing Director of Kraken, one of the most reputable crypto exchanges in the world. Describe your current role and your path to it.

My crypto journey started in the world of traditional finance. After cutting my teeth with NatWest Group in their financial crime division, I discovered the crypto ecosystem and recognized the opportunity to make a real difference to the world through digital assets. From there I held several positions at prominent fintech and crypto companies including Gemini, Circle, Paysafe Group and CashFlows, primarily in compliance and financial crime before moving into a broader business management.

I joined Kraken earlier this year as Managing Director for the UK business, one of Kraken’s busiest trading markets and leading jurisdictions.

In this role, I drive regional growth and manage our wide range of commercial, regulatory and political relationships. I am delighted to be at Kraken, as one of the largest crypto exchanges in the world, and proud to play a part in accelerating the adoption of crypto assets in the UK.

What are the biggest changes we will see in crypto over the next twelve months?

The next year will be restorative for the crypto industry. After 18 months of volatility, bull market mania and predatory practices from rogue industry players, I expect this year to be more grounded as developers focus their resources on developing products and services that offer utility, not hype.

There will undoubtedly be a regulatory response, both in the UK and other jurisdictions, to the fallout from the FTX insolvency. The high-profile nature of this collapse has catalyzed conversations between regulators and lawmakers about how to ensure that consumers can be adequately protected from the risks posed by malicious actors and those operating outside the regulatory perimeter. The UK government has encouragingly recognized that crypto adoption is the future soon enough and is developing a regulatory landscape for crypto in the UK. We anticipate that the next twelve months will be crucial in these efforts and hope that focused minds can result in a reasonable and workable framework that protects consumers without stifling innovation. The UK is striving to become a technology hub for crypto adoption and was happy to support their efforts to achieve this.

Finally, I think we were going to see greater use of cryptocurrencies as a force for good once confidence in the crypto industry was restored. In 2022, Ukraine presented a great example of how this innovative technology can provide a rail of last resort to citizens who are left behind by traditional finance when they need it. But cross-border payments aren’t the only use case for crypto, and I expect to see more practical applications emerge as smart minds in the industry find ways to use technology to solve problems. real world problems.

Is there an end in sight for the current crypto winter?

It’s hard to tell when the industry is clearly in the depths of crypto winter. However, I would argue that we won’t come out of the crypto winter just if the prices of popular assets rise in the short term. There is likely still market contagion and broken trust with multiple stakeholders. This will take time to heal, regardless of price volatility.

That said, Kraken is bullish on the long-term crypto space. Were true believers that crypto innovation will revolutionize and democratize access to financial services and improve lives. This is not our first bear market and we are fully focused on continuing to be a gateway for people to engage with the future of digital assets.

How did the demise of FTX impact the rest of the industry?

The insolvency of FTX has undoubtedly set the industry back several steps on its journey to mass adoption. Whether it’s legacy funding or crypto assets, it’s simply unacceptable for clients to lose their assets due to mismanagement by custodians. Unfortunately, but understandably, this may have a negative effect on how some UK investors view this asset class for years to come.

The crucial first step will be to rebuild trust with the crypto community. For this, centralized custodians, such as Kraken, have a role to play in educating people about the red flags that were missed with FTX, as well as how the collapse of FTX was not a failure. of crypto technology, but simply a bad actor who was allegedly fraudulent. Education must also be combined with industry efforts to become more transparent if it is to be successful in the long term. Proving reserves was a valuable first step on this journey, but ultimately more is needed. So my prediction for 2023 is that we see a lot of innovative solutions from centralized players to improve transparency and demonstrate that they have their clients’ assets backed 1-1.

What is your prediction on the launch of CBDCs and how will they impact the DeFi space and when will we see them introduced?

Today, more than 100 countries are in various stages of developing CBDCs and about 10 have successfully launched to the public. Opinions are divided on the impact of CBDCs on the De-Fi space, as well as the extent to which CBDCs align with the underlying principles of crypto assets.

While the applications are endless, CBDCs may offer governments and banks the ability to track transactions and provide real-time censorship to people who disagree with their views. While this may sound bizarre, it is not beyond the realm of possibility, so the industry is carefully monitoring the deployment of the CBDC in various countries to gauge whether it is acting as a force for good or providing control tools.

What can we expect from Kraken in terms of new products and services in the coming year?

Our biggest launch of the year was our NFT Marketplace. We opened our public beta earlier this month, allowing enthusiasts to safely explore the NFT ecosystem while removing many of the barriers that hindered industry growth during the last bull market. For example, we recognized that ETH gas fees became onerous when the network was congested and effectively prevented many people from participating because they were overpriced. As such, Kraken NFT allows transactions to take place without gas charges on the platform. We also allow customers to pay for their NFTs with cash or crypto assets in their account, as well as track the scarcity of their NFTs on the platform. We believe this will be a game changer when the market recovers!

In 2023, we have several products on our roadmap that we believe will advance the digital asset space and improve user experience for those already part of the professional trading and retail crypto ecosystems.

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