The view from the crypto summit

[ad_1]

Hello and welcome to the latest edition of the Cryptofinance newsletter. This week we review the FTs Crypto and Digital Assets Summit.

What a difference a year makes. This week, the FT hosted its second annual Crypto Summit, an opportunity to take stock and anticipate the latest trends. What stood out was how much attitudes and expectations had changed in 12 months.

Back in April, at the inaugural FT Summit, evangelists and industry enthusiasts were ready to preach the promise of crypto, backed by Super Bowl ads and pricey NFTs. It turned out to be very top of the market.

A few weeks later, Do Kwons Terraform Labs collapsed and the bubble was punctured. After a humble diet of kwontitative easing, the failure of bitcoin’s adoption supercycle theory, and an epic Caribbean crypto meltdown, this year’s participants were more realistic with their ambitions.

What’s happened in 2022, whether it’s Terra/Luna, Three Arrows Capital, or specifically FTX, is that it’s really spooked institutional investors, said Kristin Smith of the Washington DC-based Blockchain Association. She hoped that institutional interest would return.

There’s no way I can sit here and say adoption [of crypto] was as fast as expected, said David Mercer, managing director of trading platform LMAX Group, during the summits opening interview.

A notable aspect of the past year has been the rapid decline of FTX and Terraform Labs, as digital finance allows investors to withdraw money quickly and remotely and social media spreads news and rumors instantly.

Eun Young Choi, director of the National Cryptocurrency Enforcement Team at the US Department of Justice, told my colleague Stefania Palma that the collapse of FTX was a wake-up call for the general public to see how quickly a business can fall.

The scope of crypto crime, or as we see it, crypto-related crime, has kind of increased dramatically over the past few years. In addition, the volume of transactions related to criminal activities is on the rise, she added.

The collapse cemented Binances’ position as the world’s largest crypto exchange. It has set up a separate branch for US customers, but there are still doubts about whether the differences between them will materialize. Earlier this year, the crypto giant came under the CFTC’s crosshairs when the US derivatives regulator said the exchange illegally accessed US clients. Binance called the lawsuit unexpected and disappointing.

Noah Perlman, Binances’ new chief compliance officer, shared the stage with me on Tuesday and I asked him to clarify how US regulators can trust that the two entities are indeed separate, especially since the chief of Binance, Changpeng Zhao, is the ultimate beneficial owner of Binance. WE. His full answer:

The industry still has some rehabilitation to do in terms of trust with regulators in the US I think a lot of them are feeling burned by Sam [Bankman-Fried] and by other things, so I don’t know how much they take from us… I mean, it’s the truth, they are separated, but we still have work to do there.

Yet, regardless of the many pain points, it wouldn’t be a crypto conference without a high prediction about what lies ahead for an industry built on high predictions.

For Bart Stephens, co-founder and managing partner of Blockchain Capital, a venture capital firm, it will be the advance of artificial intelligence that will change the perception of crypto.

It is the natural currency of an AI-dominated world, he argued, rather than sovereign currencies and the traditional banking system.

When you look at how AI and crypto are going to intersect, it’s hard for me to think that an AI assistant is going to swipe a Visa credit card. They will naturally be drawn to always-on, digital-native, decentralized, distributed, and transparent networks… Swift won’t cut it, Visa won’t cut it.

Did you attend our crypto summit? Where will crypto be when our third annual event takes place? Send me your thoughts at [email protected].

Weekly Highlights

The first of two other takeaways from the FTs crypto summit: Binances Chief Strategy Officer Patrick Hillmann told me that now is a very difficult time to do business in the US, adding that the exchange would do everything in its power to be regulated in the UK. He declined to confirm whether Binance had filed a new registration application with the FCA. Story with my colleague Nikou Asgari here.

Second, SEC Commissioner Hester Peirce told the summit audience that the US risks falling behind the EU and UK without rules governing crypto assets. Comments from the most senior Republican member of the regulators put her at odds with SEC Chairman Gary Gensler, who has led Americas charge against crypto with a series of enforcement actions.

Coinbase ruffled the crypto feathers this week when it posted a blog associating PEPE, the latest meme coin craze, with the alt-right. The token, which is based on the Pepe the Frog meme, has been co-opted as a hate symbol by alt-right groups, according to the Anti-Defamation League, the exchange said. After the blog posts were published, #DELETECOINBASE started trending on Twitter.

Soundbite of the week: DeFis problem with reality

This week, the soundbite honor goes to Miller Whitehouse-Levine, chief executive of the DeFi Education Fund, an organization whose mission is to educate policymakers on the benefits of decentralized finance.

During an FT panel discussing the possibility of regulating crypto globally, the DeFi chief was candid about one of the central tenets of the crypto industry, which is that the rules of the crypto game are defined by the blockchain and not by regulators or the government.

The idea that the code is law ran into the problem of reality…at the end of the day, we all exist in the real world and mediate disagreements through a court system in the United States which has developed over the centuries.

Data Mining: Binances Seizes On Crypto Spot Market Slippages

The world’s largest crypto exchange, Binance, continues to lose its grip on the spot crypto trading market.

Last month, its market share fell to 46%, according to figures from data provider CCData. This is not just the second month of declines, but its lowest market share since October 2022, just weeks before the collapse of old rival FTX caused significant trading levels to shift to Binance.

For what it’s worth, the industry giant still eclipses its competition. Binances market share has been split among its competitors. Coinbase and OKX, the next two largest exchanges, each accounted for just 5% of the market.

Cryptofinance is edited by Philip Stafford. Please send your thoughts and comments to [email protected].

[ad_2]