DAVOS, Switzerland — As the World Economic Forum’s annual billionaire- and boast-filled gathering kicked off this week, a redemption party was in full swing down the road. Crowds had spilled onto a red carpet outside a whiskey tasting at the “Blockchain Hub”.
In Davos, crypto and blockchain companies have a growing presence at the World Economic Forum’s annual event
The whiskey had its work cut out for it.
After a year of massive losses, arrests and unfolding legal issues, many of the world’s biggest cryptocurrency and blockchain companies are back in Davos this year, hoping to boost — or revive, if necessary — the industry’s image and attract new investors.
The annual gathering of the world’s elite – known for its concentration of billionaires, bankers and heads of state – has become an unlikely destination for an industry that has long presented itself as an alternative to traditional banking, beyond the reach of governments and financial institutions. And while some key players — including Tether, a crypto giant that handed out free pizza at at least its annual conference — are missing this week, many others are doubling down on their presence here, both on official panels and in private stores, yoga studios and churches that they’ve converted into promotional event spaces for the week.
“We’re coming in guns blazing,” said Dante Disparte, chief strategy officer for Circle, a digital currency and payments company. He added, “2022 was crypto’s dot-com bust moment. Now we’re bringing in key leaders and putting on a lot of content that shows the technology is here to stay. It’s durable. It’s a crucial part of modernizing the global financial system. This is an agenda-setting moment that matters.”
The company, which issues a widely used cryptocurrency pegged to the US dollar, has doubled its investment in Davos this year, with two storefronts on the high street and more than a dozen employees. Like many of its peers, Circle is focusing on topics such as trust and responsibility this year, calling it a period of “big reset” for crypto.
That reset comes on the heels of a turbulent year for the industry. Cryptocurrencies such as bitcoin has lost more than half of its value in the past year. Entire firms have collapsed — most notably the $32 billion cryptocurrency exchange FTX, whose spectacular implosion in November landed its founder in jail and raised larger questions about the industry’s long-term survival.
The value of bitcoin fell sharply last year, falling from more than $45,000 in March to around $16,000 in November. But it has staged a bit of a revival in recent days and was trading above $21,000 this week, giving its advocates a burst of optimism.
At the same time, public regulators are beginning to comb the industry with new urgency, issuing fines and subpoenas.
As a result, many blockchain companies, which provide information storage technology to power the crypto market, focus on more neutral topics such as sustainability and innovation. Circle’s building is emblazoned with the slogan: “Solving problems in the real world.” Hedera, whose token has lost 80 percent of its value in the past year, bills itself as “the greenest blockchain.”
“In the wake of FTX, we have a real opportunity,” said Nilmini Rubin, Hedera’s head of global policy. “You see the bad actors fall away and what you’re left with are the more stable, better managed crypto players. This is an opportunity to reclaim what crypto is and what it can be.”
Still, some question the optics of spending heavily in Davos at a time when so many people, as well as pension funds and venture capital, have had their investments wiped out.
“When FTX collapsed, some of the biggest criticisms of the industry were about its excesses: the excessive partying, the celebrity culture, the opulence of the whole lifestyle,” said Yesha Yadav, a law professor at Vanderbilt University whose work focuses on cryptocurrency and the financial markets. “So, at this point, to double down on the same things in Davos — that’s a shock.”
However, the criticism is not limited to one industry. The annual gathering here has been a frequent target of critics who say it is tone-deaf and superficial, a place for elites to debate lofty topics such as global unity and climate change while taking little action. This year, the war in Ukraine and heightened fears of a global recession continued to dominate much of the conversation, both at official events and wild after-parties.
Meanwhile, major regulars including Amazon, Microsoft and Facebook’s parent company Meta continue to have a prominent presence here despite thousands of recent layoffs. Salesforce, which this month announced plans to cut about 8,000 jobs — or 10 percent of its workforce — has three storefronts, the most of any company, on the hallowed promenade. (Amazon founder Jeff Bezos owns The Washington Post.)
Crypto’s big presence at Davos began last year, when currencies like bitcoin and ethereum were flying high. The conference devoted two official panels to blockchain technology, and companies spent a lot of money on advertising and hobnobbing. Large billboards with buzzwords such as “blockchain” and “Web3” filled the streets and surprised many long-time conference-goers.
This year, the presence is even bigger: there are seven blockchain sessions on the official program, including panels on regulation and digital tokens.
“This is an area we spend a lot of time on,” said Brynly Llyr, the World Economic Forum’s head of blockchain and digital assets. “Crypto is not always an inviting topic, but we want to demystify it to show that what you see in the headlines is not what the technology is about.”
Many in the industry say the latest uproar is just a blip. They’ve dubbed this moment “crypto winter,” arguing that the recent cooldown is simply a cyclical correction in a market that will quickly bounce back. But skepticism remains high, especially among those in government and mainstream finance.
“This feels like a last gasp for crypto,” said Jason Furman, a Harvard University economist, former Obama adviser and frequent World Economic Forum attendee who skipped the meeting this year. “It’s like an ad I saw in a magazine saying the real estate market has never been hotter. You know those people paid for that ad six months earlier and when it came out it was just wrong and off. There’s crypto in Davos.”
But industry executives say the glimmer of Davos as well as its ties with financial firms and world governments has become even more crucial to the industry this year, as regulators introduce new rules and tighten oversight. Crypto companies spent $7.1 million on lobbying in 2021, up from $2 million the year before, according to an analysis by the Center for Responsive Politics.
“What the crypto industry really wants is to be established — to be integrated with mainstream finance, to be regulated, but on its own terms,” said American University law professor Hilary Allen. “It wants the patina of regulation to attract new investors. The need for new money has become greater. So what better place to go than Davos?”
Back at Blockchain Hub – funded by Casper Labs, an offshoot of cryptocurrency issuer and blockchain company Casper – the whiskey tasting was one of more than 50 events planned over four days. Hours earlier, Anthony Scaramucci, the founder of SkyBridge Capital, which bought $10 million worth of FTX tokens, had spoken on a panel about his conflict with the company’s embattled founder, Sam Bankman-Fried.
“I have to tell you, the betrayal and the fraud — it’s bad on a lot of different levels,” Scaramucci said. “It hurt my reputation. When you have a friend betray you like that, it’s really sad. But that doesn’t mean it’s the end of blockchain or crypto.”
Down in the block, the city’s billboards are in on the message. “Escape the hell of controlling banks and governments,” says one promoting a crypto castle in Germany. Another, near a parking lot, proclaims to the world’s richest: “Crypto is not for wealth, but for freedom. And freedom is wealth.”
Tory Newmyer and Julian Mark contributed to this report.
