TradFi interest in crypto continues to rise amid an increase in regulatory actions from the US government

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(Kitco News) – The collapse of several prominent cryptocurrency exchanges, combined with the struggles the industry as a whole has faced over the past year, has led some to conclude that interest in crypto has waned. But behind the scenes, the opposite is true as companies offering related services continue to see an increase in requests for assistance.

That was the main takeaway from Kitco Crypto’s conversation with David Schwed, CEO of blockchain cybersecurity provider Halborn, who indicated that the firm has received inquiries from a number of clients “who are beginning their crypto journey” but have yet to go public.

“Sentiment is generally positive and many companies are taking advantage of the bear market by building,” Schwed said.

The COO, who previously served as the global head of digital assets technology for BNY Mellon and also held senior-level positions at Merrill Lynch, Salomon Smith Barney, Citigroup and Galaxy Digital, indicated that several high-level executives will make the transition to Web3 in the near future future as the sector “is the future and has the ability to disrupt so many industries.”

“For me, the decision centered on having the opportunity to help secure the future of this transformative technology,” he added.

As for the areas of the crypto ecosystem that are proving to be the most attractive to leaders in traditional finance (TradFi), Schwed pointed to the transparency offered in decentralized finance (DeFi) as “incredibly exciting for TradFi as well as the ability for projects to create new financial products and instruments in the DeFi ecosystem.” He also noted that “The success of DeFi continues to have a direct net positive impact on TradFi as there is still a need to switch crypto to fiat.”

The increased involvement of TradFi with DeFi is a positive step, Schwed said, as it will increase the need for more secure projects and help inject more capital into the markets. The industry experience that TradFi leaders bring will help with the development of DeFi projects, he added.

Issues related to security, and the fact that blockchain is still a new technology in many respects, are the main areas of concern for TradFi companies looking to get involved in the crypto space. The cybersecurity expert said these problems are “further compounded by a lack of skilled talent, immutability of transactions and nation-state actors.”

Evidence that the government is slowly opening access to the crypto ecosystem in a controlled manner was demonstrated by the approval of BNY Mellon to begin offering crypto custody to its clients, which Schwed said was a positive sign for the future viability of digital assets. “Just the fact that the largest and oldest custodian bank now has digital assets is a signal that crypto is here to stay,” he added.

When asked if he believed that all major banks would eventually offer crypto custody, the COO replied “Absolutely!”, noting that the majority of the major banks he has spoken with are working on custody-related initiatives or exploring other major banks as sub-custodians.

And going a bit off topic, when asked about some interesting use cases that Schwed has come across that haven’t really been mentioned or covered much in the press, he noted ongoing discussions from airlines tossing around the idea of ​​issuing tickets as NFT- is. , which would open up a secondary market for tickets.

“This will benefit everyone as passengers can sell their tickets if they cannot fly and by using smart contracts, airlines can receive a portion of the sale,” he said.

For now, it remains to be seen whether the government will take a more open stance on crypto or continue to crack down on the industry as it has done since the collapse of FTX. If Thursday’s announcement by the SEC that betting services offered by cryptocurrency exchange Kraken constitute offering unregistered securities is any indication, the government appears to be walking the stick instead of the carrot.