While cryptocurrency promoters were in the spotlight at the annual World Economic Forum – with a heavy schedule of briefings, panels and after-hours parties – Davos veterans blasted digital assets over volatility, lack of regulation and involvement in illicit activities.
Crypto exchanges crowded the sidelines of the main conference aiming to gain credibility with mainstream companies ranging from Tyson Foods to Salesforce.com.
While some crypto events drew speakers from traditional financial institutions, including Perella Weinberg Partners and State Street, the general tone was a demand for regulation and concerns about risks.
“The future of crypto, I’m sorry to say, looks regulated to me,” said Nela Richardson, senior vice president and chief economist for human resources software provider ADP. She said she thinks central banks will step in to provide oversight.
“Cryptocurrencies have received a big push from (Russian) sanctions,” Saudi finance minister Mohammed al-Jadaan said. “And I’m worried because it could be used for illicit activities.”
Coins Become Worthless
David Rubenstein, co-founder and co-chairman of US buyout firm Carlyle, also shared his concerns. “A lot of wealthy people who want to hide their assets after the Russian situation will say I will put 5% to 10% in some basket of cryptocurrencies,” he said.
“The government won’t know what I have, they can’t get it and I can always get access to it.”
The roles of regulators, authenticators and custodians have come into sharp focus in Davos, which began after a crypto crash that saw digital assets lose some $800 billion in market value and one of the top 10 digital coins become worthless.
“It’s still early days (for crypto) in terms of (being) an investment class,” Ling Hai, co-president for international markets at Mastercard, said.
“It needs to be sanctioned and regulated by the central bank and government. It has monetary implications. Value needs to be stable.”
However, crypto and financial executives on the sidelines said the rout would strengthen the industry because strong technology and coins would survive it.
“There’s been a lot of volatility but the reality is it’s here to stay,” said Justin Fogerty, founder of financial consultancy Pivotas. “I think what’s happened with the volatility is that it has actually taken a lot of speculators and gamblers out of the market.”
- Reuters, with additional editing by George Russell