End of ‘crypto gold rush’ leaves local economies little to show: report

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By Chris Matthews

Brookings says few crypto startups or jobs have been ‘stable or sustainable’

Bitcoin was one of the best performing assets of the year, fueling hopes in the crypto community that the price declines seen following the collapse of FTX were just a bump in the road. towards more widespread adoption of the emerging technology.

The price increases, however, have not been associated with an increase in job postings or new startups in the sector, according to a new report from the Brookings Institution. This may leave some decision makers regretting their adoption of the technology.

“Despite efforts by some state and local governments to attract crypto activity, few startups and associated jobs have been stable or sustainable,” according to the report, authored by Tonantzin Carmona, a Brookings Metro fellow who studies crypto. impact of public policies. on local economies.

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The report examines the share of job postings that require “crypto and blockchain skills” as a share of overall listings as well as the number of startups in the space, and found that crypto job postings have significantly decreased since the collapse of FTX last November.

“During the period of crypto’s growing popularity in the mid-2010s, industry job postings saw an overall upward trend. However, much like cryptocurrency prices themselves, this trend was not without volatility,” Carmona wrote.

“As bitcoin values ​​have fluctuated, job vacancies have also fluctuated, with the most dramatic rise occurring in 2021 and early 2022,” she added, noting that the failure of crypto like TerraUSD and FTX was followed by a “dramatic” drop in numbers. crypto jobs.

“It should be noted that the number of job postings in the crypto industry was extremely low, even at the peak: less than 0.15% of all posts, with the current level remaining below 0.08% “, according to the report.

There has been an even more dramatic drop in the rate of startup creation in the crypto space, according to a Brookings analysis of Crunchbase data, with entrepreneurial activity peaking in early 2018 and falling to near zero today.

The report argues that attempts by some local decision makers like Miami Mayor and Republican Presidential hopeful Francis Suarez to leverage crypto for local economic development have been largely unsuccessful and that any economic benefits arising from crypto are went to traditional tech hubs like San Francisco and New York. .

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“The crypto gold rush may be over, but the past few years can provide lessons for local leaders on how to capitalize on emerging technologies,” Carmona wrote, arguing that policy makers could have more success by betting on technologies supported by federal funding, such as artificial intelligence. , quantum information science and biotechnology.

According to the report, the crypto surge also highlights the difficulty small towns often have in attracting economic activity from disruptive technologies.

“The sharp rise in crypto and relatively buoyant activity seen in New York, San Francisco and Los Angeles underscores the ‘superstar’ nature of how disruptive technologies (especially digital technologies) are consolidating in the biggest markets. , while often leaving other places behind,” Carmona writes.

“Even though many local leaders have sought to attract crypto companies to create or grow tech hubs in their regions,” she added, “the evidence presented here suggests that the metropolitan areas that have emerged as the hubs The largest and most resilient crypto companies had already developed strong regional advantages in technology or finance before they saw massive crypto growth.”

-Chris Matthews

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently of Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswire

07-08-23 1204ET

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