After the collapse of the FTX exchange, the industry wants to regain the confidence of investors. It should start in St. Moritz at CfC.
The crypto industry has had a difficult year: With the collapse of the FTX exchange, there is great uncertainty, both inside and outside the industry. After years of fabulous profits that could be made by simple speculation, a new sobriety has now returned. This can also be seen in the run-up to one of the most prestigious conferences, the Crypto Finance Conference (CfC), which takes place in St. Moritz, Switzerland, next week. “The conference will definitely be strongly driven by the motto ‘Let’s be honest!’,” conference organizer Nicolo Stöhr told the Berliner Zeitung: “We need to build trust again.” FTX has “rather a classic business model” had. The available information indicates a “fraud” as “assets have been found to have been used elsewhere”. The crucial question is: “How can something like this be prevented in the future?” Stöhr believes that it is possible that the FTX crash will have a cleansing effect on the industry. So the new caution may also have an advantage. “A bear market exists to build something,” says Stöhr.
The Swiss admits that the mood among crypto investors is mixed: “There are investors who are now taking a step back and those who see the development as a cycle.” The cautious are encouraged by statements from the central banks, which are naturally fighting for their monopoly. ECB President Fabio Panetta recently described unsecured cryptocurrencies as “gambling disguised as an investment asset”. The US authorities are also becoming increasingly cautious and are now taking a closer look. The Gold Rush mood is over. The Börsenzeitung analyzes: “A regulation of the kind the crypto industry wants – namely one where digital asset providers can essentially continue to trade free of minor concerns regarding investor protection and risk management – will not exist in either, which still gives the US in Europe.”
Sensible regulation is also in the industry’s interest. Nicolo Stöhr clearly sees the ball in the hands of the regulators: “We have been talking about regulation at the conference since 2018. There has been movement in different areas, less in others. That is why we keep coming back to the topic, because the discussions in Today and then are alike.” Stöhr says it is “important that we come to sensible regulation soon.” Companies, customers and investors need “railings”. The head of the conference in the Engadines sees that the Americans have a primary responsibility: the SEC has still not decided how it will regulate. “We’re in a vacuum, and that’s a problem: the global rules are mostly based on the US, and we now have to have rules to better protect investors,” says Stöhr. However, it is still completely open how such a disruptive technology should be regulated. Stöhr: “We need to discuss: How do you regulate crypto sustainably? Is it even something that can be regulated? And how do you regulate it globally?”
Stöhr finds the Swiss way to be the “most effective”: “It’s pragmatic. You take an existing law, adapt it and supplement it for the crypto market.” Stöhr is concerned about regulation at the European level. Brussels launched the regulation Markets in Crypto Assets (Mica) in the fall of 2022, which is expected to be implemented in the coming months. The EU has “written its own law with Mica, with a hundred pages, how many things are difficult for the industry to implement,” says Stöhr.
Stöhr sees the danger that, especially after the FTX crash and the spectacular extradition of the founder Sam Bankman-Fried, there will be too strict a containment, which could make the new technologies uninteresting for investors. “Hopefully there won’t be any over-regulation,” says the Swiss. In China, you can see that overly strict regulation is counterproductive: “With social scoring, China has a model that I, as a Swiss, do not like. Because that’s where people become transparent, and that’s exactly what we don’t want with crypto.”
CfC wants to contribute to increasing the understanding of crypto developments on the political and social level: “We want to bring the traditional world and the crypto world together,” says Stöhr. The participants come from the USA and Europe as well as from Asia and Africa. A prominent representative of Wall Street is Donald Trump’s former press secretary, Anthony Scaramucci, who plays a pioneering role with his company Skybridge. Stöhr: “Scaramucci has invested in various projects. Above all, it shows that you can also be invested in crypto as a classic investor.” The appearance of Changpeng Zhao, the founder of the world’s largest crypto marketplace Binance, should be particularly interesting. After the FTX crash, there was a bank run of sorts at Binance. The company, meanwhile, appears to have got capital outflows under control. Nevertheless, the success story of the market leader is also under scrutiny. Nicolo Stöhr: “Binance is definitely also asking itself: How do you see the decentralized world as a centralized exchange?”