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Davos 2023: Intimidated crypto crowd feels winter freeze on WEF

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DAVOS, Switzerland, Jan 19 (Reuters) – In the snow and ice on the main street of Davos, the impact of crypto winter is evident to WEF attendees.

Last May, the storefronts that line both sides of the Promenade street that runs through the Swiss ski resort were taken over by cryptocurrency companies, rolling in bitcoin.

Now there are just a handful and the executives who have arrived in Davos have traded their hoodies for blazers despite sub-zero temperatures outside.

Some digital industry people who settled on the sidelines of the World Economic Forum (WEF) annual meeting quickly distanced themselves from cryptocurrencies.

“I expect there to be a greater focus on utility value and practical applications of technology, and less focus on retail investors chasing meme coins,” said Jeremy Allaire, CEO of Circle, USDC’s stablecoin issuer.

“There was a lot of nonsense,” Allaire told the Reuters Global Markets Forum.

Former Reserve Bank of India Governor Raghuram Rajan believes last year’s slump in digital assets allows investors to focus on the true value of technology.

“We are in the right place now in terms of crypto,” he said.

Executives in Davos said it was now all about blockchain technology, proper controls and regulation, and the disruptive promise it holds for financial services and beyond.

“We are an infrastructure plumbing game. We build infrastructure today for digital assets, which is crypto. Tomorrow will be different assets,” said Dmitry Tokarev, chief executive of Copper, which provides escrow services.

“I would question some of the things I’ve seen, ‘What’s the return on that?'” Tokarev added, referring to the large turnout of cryptocurrency firms at the last WEF meeting, which was unusually held in May as a result of the COVID-19 pandemic. Covid-19.

“We always ignore the noise. All our partners were here last year. They are here this year,” added Tokarev.

The world of digital assets has changed dramatically since May, with crypto market caps plummeting and some major crypto companies going bankrupt as investors retreat from riskier assets in the face of rising interest rates.

Cryptocurrency market capitalization has shrunk by $1.4 trillion, a third of its value since peaks hit in late 2021, and some of the best-known cryptocurrency companies are under stress or have gone bankrupt, including the collapse of cryptocurrency exchange FTX.

“There is a place to negotiate use cases, but they cannot be the sole focus, we need to move to more real use cases and put attention on them,” said Denelle Dixon, CEO of the Stellar Development Foundation, which supports the Stellar blockchain.

‘LIVED FROM A BULLET’

While interest remains in technology, the conversation is turning to accountability.

Colm Kelleher, chairman of Swiss bank UBS (UBSG.S), told a WEF panel that blockchain technology will help reduce costs for banks. But he said the industry needs to figure out the basics, like anti-money laundering controls.

“We kind of dodged a bullet,” Kelleher said, noting that the collapse in cryptocurrency values ​​did not cause systemic problems. “We had investors who wanted to invest in currencies. And we had to draw a line on what was right for those investors,” he added.

Yat Siu, co-founder of Animoca Brands, a Hong Kong-based blockchain game developer, supported the companies in Davos.

“These are companies with serious cash positions and revenue-generating companies,” Siu said. “These are billionaire companies.”

The cryptocurrency is trying to establish its presence, said SkyBridge Capital founder Anthony Scaramucci, adding that “there is nothing more established than the World Economic Forum.” Scaramucci maintains a bullish stance on crypto despite losses over the past year.

Back on the Davos Promenade, some signs of cryptocurrency’s lost arrogance linger.

Parked outside a pavilion promoting blockchain earlier in the week was a bright orange Mercedes.

On the hood, instead of the automaker’s insignia, there was a copper-colored symbol for bitcoin.

The tires carried a white slogan: “In Bitcoin we trust”.

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Additional reporting by Lananh Nguyen in Davos, Stefania Spezzati and Lisa Mattackal; Edited by Alexandre Smith

Our Standards: Thomson Reuters Trust Principles.

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