In Davos, cryptocurrency and blockchain companies have a growing presence at the annual World Economic Forum event

Comment

DAVOS, Switzerland — Earlier this week of the World Economic Forum’s annual gathering filled with billionaires and hustlers, a redemption party was in full swing along the road. Crowds had spilled onto a red carpet outside a whiskey tasting at the ‘Blockchain Hub’.

“Restoring Trust in Digital Assets,” read a sign outside.

Whiskey had its work cut out for it.

After a year of massive losses, arrests and deployments legal issues, many of the world’s largest cryptocurrency and blockchain companies have returned to Davos this year, hoping to bolster – or resurrect, if need be – the industry’s image and attract new investors.

The annual gathering of the world’s elite – known for its concentration of billionaires, bankers and heads of state – has become an unlikely destination for an industry that has long marketed itself as an alternative to traditional banking, beyond the reach of the government and financial institutions. And while some key players, including Tether, a cryptocurrency giant that handed out free pizza at least at the conference of the year, are missing this week, many more are doubling down on their presence here, both on official panels and in private shops, studios studios and churches that they converted into promotional event spaces for the week.

“We’re coming in guns blazing,” said Dante Disparte, chief strategy officer at Circle, a digital currency and payments company. He added: “2022 was the dot-com bust time for cryptocurrencies. We are now engaging key executives and putting in a lot of content that demonstrates that technology is here to stay. It’s durable. It is a crucial part of modernizing the global financial system. This is an agenda-setting moment that matters.”

Are cryptocurrencies a house of cards?

The company, which issues a widely used cryptocurrency pegged to the US dollar, has doubled its investments in Davos this year, with two main street storefronts and more than a dozen employees. Like many of his peers, Circle is focusing on topics like trust and accountability this year, calling it a “great reset” period for cryptocurrencies.

That reset comes on the heels of a turbulent year for the industry. Cryptocurrencies like bitcoin have lost more than half of their value in the past year. Whole companies have collapsed, most notably the $32 billion cryptocurrency exchange FTX, whose spectacular implosion in November landed its founder in jail and raised wider questions about the industry’s long-term viability.

The value of bitcoin dropped sharply last year, dropping from over $45,000 in March to around $16,000 in November. But it has staged a bit of a rally in recent days and has traded above $21,000 this week, giving its supporters a burst of optimism.

“Crypto winter” has arrived. And it looks more like an ice age.

At the same time, government regulators are starting to scour the industry with new urgency, issuing fines and subpoenas.

As a result, many blockchain companies, which provide information storage technology to power the cryptocurrency market, are focusing on more neutral topics such as sustainability and innovation. Circle’s building is emblazoned with the slogan: “Solving Real-World Problems.” Hedera, which has a token that has lost 80% of its value over the past year, bills itself as “the greenest blockchain.”

“On the heels of FTX, we have a real opportunity,” said Nilmini Rubin, head of global policy at Hedera. “You see the bad actors vanish and what you are left with are the more stable and better governed cryptocurrency players. This is an opportunity to reclaim what cryptocurrency is and what it can be.”

However, some question the high-spend outlook in Davos at a time when so many people, as well as pension funds and venture capital, have had their investments wiped out.

“When FTX collapsed, some of the biggest criticisms of the industry were about its excesses: the excessive partying, the celebrity culture, the lavishness of the whole lifestyle,” said Yesha Yadav, a law professor at Vanderbilt University whose work focuses on cryptocurrency and financial markets. “So, at this point, doubling down on the same things in Davos is a shock.”

The criticisms, however, are not limited to one sector. The annual gathering here has been a frequent target of critics who say it is deaf and superficial, a place where the elite can discuss noble topics like global unity and climate change while taking little action. This year, the war in Ukraine and heightened fears of a global recession continued to dominate much of the conversation, both at official events and booze parties.

Meanwhile, big-name regulars, including Amazon, Microsoft, and Facebook’s parent company Meta, continue to have a prominent presence here despite thousands of recent layoffs. Salesforce, which this month announced plans to cut about 8,000 jobs — or 10 percent of its workforce — has three storefronts, the most of any company, on the hallowed waterfront. (Amazon founder Jeff Bezos owns the Washington Post.)

Will Davos save the world or put it out of its misery?

Crypto’s huge presence in Davos started last year when currencies like bitcoin and ethereum were soaring. The conference dedicated two official panels to blockchain technology, and companies spent heavily on advertising and hobnobbing. Large billboards with buzzwords like “blockchain” and “Web3” filled the streets and took many longtime conference-goers by surprise.

This year, that attendance is even bigger: There are seven blockchain sessions on the official schedule, including panels on regulation and digital tokens.

“This is an area we are spending a lot of time on,” said Brynly Llyr, head of blockchain and digital assets at the World Economic Forum. “Cryptocurrencies are not always an inviting topic, but we want to demystify it to show that what you see in the headlines is not what the technology is about.”

Many in the industry say the latest uproar is just a blip. They dubbed this moment “crypto winter,” arguing that the recent cold is simply a cyclical correction in a market that will recover quickly. But skepticism remains high, particularly among those in government and traditional finance.

“This looks like a last gasp for cryptocurrencies,” said Jason Furman, an economist at Harvard University, a former adviser to Obama and a regular at the World Economic Forum. who missed the meeting this year. “It’s like an ad I saw in a magazine saying the housing market has never been hotter. You know those people paid for that ad six months in advance, and when it came out, it was just wrong and off. This is cryptocurrency in Davos.”

The companies that helped create the “crypto winter” of 2022

But industry executives say the glitter of Davos, as well as its ties to financial firms and global governments, have become even more crucial to the sector this year, as regulators introduce new rules and tighten oversight. Crypto companies spent $7.1 million on lobbying in 2021, up from $2 million a year earlier, according to an analysis by the Center for Responsive Politics.

“What the cryptocurrency industry really wants is to establish itself, to be integrated with traditional finance, to be regulated, but on its own terms,” said Hilary Allen, a law professor at American University. “He wants the veneer of regulation to attract new investors. The need for new money has become more desperate. So what better place to go than Davos?”

Back at the Blockchain Hub, funded by Casper Labs, an offshoot of cryptocurrency issuer and blockchain company Casper, the whiskey tasting was one of more than 50 events planned over four days. Hours earlier, Anthony Scaramucci, the founder of SkyBridge Capital, which bought $10 million worth of FTX tokens, had spoken on a panel about his falling out with the company’s founder, Sam Bankman-Fried.

“I have to tell you, treason and fraud – it’s bad on many different levels,” Scaramucci said. “It damaged my reputation. When you have a friend who cheats on you like that, it really sucks. But that doesn’t mean it’s the end of blockchain or cryptocurrencies.”

US hedge funds subpoena in investigation into cryptocurrency exchange Binance

Down the block, the city’s billboards are in the message. “Escape the hell of bank and government control,” says one promoting a Crypto Castle in Germany. Another, near a parking lot, proclaims to the richest in the world: “Crypto is not for wealth but for freedom. And freedom is wealth.

Tory Newmyer and Julian Mark contributed to this report.

Add a Comment

Your email address will not be published. Required fields are marked *