$1.4 trillion wipeout hits crypto industry at WEF

There were fewer crypto companies along the Davos Promenade in 2023 than in previous years after the market crash. Circle, the company behind the USDC stablecoin, was one of the few in attendance.

Arjun Kharpal | CNBC

DAVOS, Switzerland — In recent years at the World Economic Forum in Davos, Switzerland, the number of participants in the cryptocurrency industry has soared.

But after a nearly $1.4 trillion write-off in 2022, the cryptocurrency industry is a little more secretive about how it splashes the money, and several companies spotted last year are missing out. 2022 was marked by failed crypto projects, liquidity issues and bankruptcies, topped off by the crash of major exchange FTX.

When the World Economic Forum was held last May, bitcoins it hovered around $30,000, having already fallen more than 50% from its all-time high in November 2021. More pain followed with bitcoin falling as low as $15,480.

The Promenade is the main street in Davos where businesses and governments take over shops and cafés for the week. Last year, crypto firms from all walks of life took over. But since the market has slipped, there are far fewer cryptocurrency companies with flashy storefronts in Davos.

A shop that sells non-fungible tokens, or NFTs, has disappeared. The prices of NFTs, which are digital collectibles, also plummeted last year. What’s left are companies that survived the bear market and are looking to expand their businesses.

“It’s very clear that the period of speculation is coming to an end and every company that you see in the foreground … is really focused on real-world use cases,” said Teana Baker-Taylor, vice president of policy and strategy regulation at Circle, the company behind the stablecoin USDC.

A stablecoin is a type of digital currency that should be pegged one-to-one with a fiat currency. USDC is pegged to the US dollar. Circle claims it is backed by real-world assets such as US Treasuries so that one USDC can be redeemed for $1.

Casper Labs, a company that has built a blockchain designed to be used by businesses, runs a space on the Promenade called the Blockchain Lab. Casper Labs was also there last year in Davos.

Cliff Sarkin, head of strategic relations at Casper Labs, said he was “cautiously optimistic” that the cryptocurrency market has bottomed out.

“So we’ve been in the bear market for more than a year, so I think the shock of that has leveled off and for those of us who have been in the space for years…we feel like this is the time to build,” Sarkin said CNBC.

He added that the cryptocurrency firms that have remained in Davos are “substantial projects” and “the real deal” compared to things like NFTs.

There were also those in traditional finance who welcomed fewer crypto companies.

Mark Haefele, chief investment officer at UBS Global Wealth Management, was asked at an event hosted by the Swiss bank what he would like to see in Davos this year. He said he’s seen it before: “he’s less crypto on the high street.”

The mysterious case of the orange bitcoin car

On Monday, a bright orange Mercedes-Benz car was parked outside the Blockchain Hub on the Promenade.

The orange Mercedes was parked along the Davos Promenade. No one nearby saw who parked it there. The license plate reads “Kuna”, which is the name of a Ukrainian cryptocurrency exchange.

Arjun Kharpal | CNBC

A coin representing one bitcoin was placed where the Mercedes-Benz logo used to be. The words “in crypto we trust” were printed on the tires and on the license plate. The license plate had the Ukrainian flag and the name Kuna, which is the company behind a cryptocurrency exchange of the same name.

Kuna also set up the “Ukraine Reserve Fund” after the war with Russia started, where people could donate cryptocurrencies to Ukraine.

Nearby people CNBC spoke to could not verify who parked the car there.

However, two cryptocurrency executives who spoke to CNBC did not welcome the orange car, particularly after the market crash and industry excesses were exposed. One noted that the presence of such a car didn’t help the reputation of the industry which took a major hit last year.

CNBC reached out to Semen Kaploushenko, CEO of the Kuna exchange, via LinkedIn, but has yet to receive a response.

CNBC has also reached out to the Blockchain Association of Ukraine, of which Kuna founder Michael Chobanian is the president, but has yet to hear back.

The words “in crypto we trust” were printed on the license plate and tires.

CNB | Arjun Kharpal

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