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May 25, 2022, 8:02 a.m. EDT

The Davos paradox: Crypto industry parties at globalization’s mecca

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By Steve Goldstein

Cryptocurrency was created to bypass the global elite dominated by banks and their captured politicians after the 2008 financial crisis.

So it’s somewhat jarring that the crypto industry is out in full force at the mecca of globalization, the World Economic Forum in Davos, Switzerland. The blockchain services firm Polkadot has a pavilion right across the street from the German software giant SAP. Crypto firms have been throwing parties every night, going some way to replace the liquor previously on offer from the excommunicated Russians.

The party hasn’t stopped for the industry, even as bitcoin /zigman2/quotes/31322028/realtime BTCUSD -0.98% prices have halved from their peak, and the Terra algorithmic stablecoin has blown up. Sen. Pat Toomey, the Pennsylvania Republican, took to the Davos stage to champion his legislation that would create disclosure requirements around stablecoins, a proposal that PayPal CEO Dan Schulman welcomed.

Anthony Scaramucci, the founder of SkyBridge Capital and ever so briefly President Trump’s director of communications, said his firm bought carbon offsets along side its crypto investments, as he also pointed out the energy costs of more traditional forms of finance — such as his mother driving to Chase.

Not that everyone’s a fan of the roughly $1.3 trillion industry.

“Stablecoins to me seem like a solution in search of a problem, just like everything in the space,” replied former Obama administration economics adviser Jason Furman.

The crypto industry is looking at officaldom to provide a regulatory framework in which to operate. “I think the more that crypto companies come out and engage with them, and be ready to cooperate, the more than we will be able to get to a good spot,” said Brett Harrison, president of the crypto exchange FTX U.S., in an interview.

Harrison said Tether /zigman2/quotes/226258617/realtime USDTUSD -0.01% , which briefly broke the buck on doubts surrounding its reserves, demonstrated resilience. “That just goes to show you that there’s money there,” he said. “Imagine going into your bank and asking for $7 billion right now.” But he said it was a misnomer for something like TerraUSD, which was backed by another cryptocurrency Luna, to have the stablecoin moniker. “This is an asset that works until it doesn’t,” he said. “This was a pivotal moment for people to understand that these things are not all created equal.”

Without quantifying, Harrison said the privately held FTX U.S. hasn’t seen the drop off in users that Coinbase /zigman2/quotes/225893452/composite COIN +4.30% has reported, which he attributes to having more of an institutional base. And more broadly, he said there was some good to take out of the big drop in cryptocurrencies coming alongside a slump in tech stocks.

“Crypto as an asset class has matured,” he said. “Part of the maturation means that large institutions are using larger allocations in their portfolios. And what that means is that during any sell off, when investors are looking at risk assets to sell, they’re going to look across their portfolio and find crypto and sell that as well.”

/zigman2/quotes/31322028/realtime
US : CoinDesk
19,106.47
-188.24 -0.98%
Volume: 0.00
July 3, 2022 11:55a
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/zigman2/quotes/226258617/realtime
US : Kraken
1.00
-0.0001 -0.01%
Volume: 23.06M
July 3, 2022 11:55a
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/zigman2/quotes/225893452/composite
US : U.S.: Nasdaq
$ 49.04
+2.02 +4.30%
Volume: 8.56M
July 1, 2022 4:00p
P/E Ratio
4.31
Dividend Yield
N/A
Market Cap
$10.89 billion
Rev. per Employee
$1.93M
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