2022 is shaping up to be the most pivotal year for the crypto ecosystem since Bitcoin’s 2009 release. Since January, we’ve seen:
- Another crypto winter setting in, rattling asset values and shuttering high-profile projects like the Terra stablecoin.
- Governments moving to regulate aspects of the crypto ecosystem in the UK, Europe and The United States.
- And Ethereum undertook the Merge, transferring one of the biggest Layer 1 Networks to a Proof-of-Stake model.
So, with crypto at a crossroads, what will the future hold? How will a rewired crypto ecosystem look different in the years to come from what we’ve seen before?
To answer, we brought together six of the smartest people we know in the crypto space:
- Kaushik Sthankiya – Global Head of Banking and Payments at Kraken
- Daniel Moczulski – Managing Director, UK at eToro
- Oksana Grinchak – Managing Director, Europe at Amber
- Henry Child – Head of Tokens at Bitfinex
- Amanda Shoffel – Head of Regulatory Change at Bitstamp
- Nick Charteris – General Manager, UK at Crypto.com
course, we couldn’t resist sharing some of the insights our panellists brought on the night. So we’ve collected a few of their insights from the night that addressed the big questions:
What will the future of Crypto hold?
This was perhaps the biggest question of the night: How will the crypto industry go next, after a turbulent 2022. No surprise, regulation was a major talking point. But the other was the application of blockchain technologies to non-financial use cases, like identity. With academic records and birth, death and marriage certificates moving to a blockchain, is this the start of a new world of tokenisation?
“Almost everything we’ve seen in crypto so far has been a financial or economic use case – they’ve been about trading. But that’s just a means to an end. What we’re missing is the ‘Facebook of Crypto’ – a new use case that wasn’t possible before.” Henry Child
“When we talk about how crypto will change people’s lives, we talk a lot about the tokenisation of assets and the fractionalisation of assets. At the more idealistic end, it’s about controlling your own identity rather than having it controlled by a central authority. That opens up a whole lot of opportunities to own your own financial services.” Nick Charteris
“Regulation isn’t the devil. But the devil is in the details. We want regulation that is smart, that is orderly, and that doesn’t stifle innovation. So the question at the moment isn’t if we will be regulated or not, we will all be regulated at some point.” Amanda Shoffel
What are the biggest changes you’re seeing?
Of course, we can’t ignore the changes going on in the industry today. From the rapid expansion of stablecoins, to institutional investors entering the crypto space and the promise of mass retail adoption, huge change is happening right now.
“The lines between traditional payment rails and crypto rails are already blurred. The advent of stablecoins and their growth has been huge. That’s blurring the lines between crypto and fiat.” Kaushik Sthankiya
“For institutions, adding crypto to a cross-asset portfolio has actually improved performance. A lot of that was from the cross-exchange arbitrage, which has compressed over the last few years. But also crypto assets have actually signalled trends and trend reversals faster than traditional assets.” Oksana Grinchak
“The attraction of crypto is that everyone in the UK has been gripped by the story of crypto, especially over the last 2 or 3 years. People who have never traded a stock are now taking a crypto position.” Daniel Moczulski
Who is investing in crypto?
It’s no longer the cliched “crypto bro” who is championing the growth of crypto assets. It’s retail investors of all shapes and sizes who are early adopters, although hedge funds are not far behind.
“Ten years ago at a dinner party, people talked about house prices. Now they’re talking about the coins they’re buying.” Daniel Moczulski
“It used to be that institutions were the leaders in adopting new financial tools, not retail investors. Crypto is the opposite – it’s being led by retail investors and institutions are the ones catching up.” Henry Child
“Traditional hedge funds are the most active institutional investors in the crypto space. In the wake of the crypto winter, it’s this part of the market that has grown massively, probably 10-fold in volumes.” Oksana Grinchak
What does the industry need to thrive?
Last but certainly not least: everyone wants to know what ingredients it will take for the crypto ecosystem to grow further. Perhaps unsurprisingly, it comes back to some of the key themes that ran through the night: clear regulation and the trust of users.
“Everyone in the industry wants clarity and consistency from regulators. People are willing to be regulated, but we need that clarity.” Amanda Shoffel
“We have to look at how the industry can empower people with their identity. When it comes to trust, there’s a big difference between privacy and anonymity.” Kaushik Sthankiya
“One word runs through everything: that’s trust. People need to feel like they can safely leave their assets with you.” Nick Charteris