The recent downturn in cryptocurrency may have damaged institutional investors’ confidence in the sector, but may eventually give rise to a more mature industry.
Ari Redbord, head of legal and government affairs at blockchain intelligence firm TRM Labs, described the collapse of crypto companies and job losses in recent weeks as “a recovery of less sophisticated projects”.
But added: “We will see a completely different kind of crypto transition than what we had seen coming out of this winter.”
Redbord, a former senior financial intelligence adviser to the US Treasury Department, spoke at a Barron’s Live webinar hosted by Financial newstogether with Gwendolyn Regina, Investment Director in Binance’s blockchain division BNB Chain.
His comments come in the middle of a violent period for the crypto industry, which has undergone a crash in values that puts pressure on many major players. Coinbase cut 1,100 jobs, hedge fund Three Arrows Capital went bankrupt, and lender Celsius is still locked in rescue talks after freezing customer withdrawals.
But both Redbord and Regina set a positive tone for the sector’s long-term outlook. Regina said that in the midst of the deluge of negative headlines, people would turn to innovation in blockchain, crypto’s underlying technology, instead of being caught up in the hype that accompanies soaring cryptocurrencies.
“There are solid projects being built and there is solid innovation,” she said. “On a daily basis, I talk to a lot of developers and entrepreneurs, and especially in a bear market, it’s great because the valuations are down and people are much more realistic.”
Redbord, meanwhile, pointed to the increased level of scrutiny that the industry had come under as a result of the downturn, saying the crypto-economy would become “more mature and more regulated” as a result.
EU politicians recently agreed on a package of rules to regulate industry and combat money laundering, while the UK Treasury recently launched a consultation on how to protect itself against stablecoin collapses such as terraUSD and its interconnected cryptocurrency, luna, which imploded in May.
In the United States, a couple of senators recently unveiled a set of draft rules for the sector that, while unlikely to become law in its current form, are likely to shape the country’s regulatory agenda in the coming years.
«Out of the ashes will grow a much safer, more sophisticated room, with hardened net defenses, anti-money laundering, regulation and tools to [carry this out]”, said Redbord.
Follow the entire webinar here
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