$1.4 trillion deletion hits crypto industry at WEF

$1.4 trillion deletion hits crypto industry at WEF

Along the Davos Promenade in 2023 there were fewer cryptocurrency companies than in previous years after the market crash. Circle, the company behind the USDC stablecoin, was one of the few present.

Arjun Jarpal | CNBC

DAVOS, Switzerland – In recent years, at the World Economic Forum in Davos, Switzerland, the number of attendees from the cryptocurrency industry has skyrocketed.

But after wiping out nearly $1.4 trillion in 2022, the crypto industry is being a bit more secretive with how it splashes out cash and several companies spotted last year are missing. 2022 was marked by failed crypto projects, liquidity problems, and bankruptcies, capped off by the collapse of major exchange FTX.

When the World Economic Forum was held last May, bitcoins it was hovering around $30,000, having fallen more than 50% from its all-time high in November 2021. More pain followed with bitcoin plunging to $15,480.

The Promenade is the main street in Davos where businesses and governments take over the shops and cafes during the week. Last year, crypto companies from all walks of life took over the place. But since the market crash, there are far fewer cryptocurrency companies with flashy storefronts in Davos.

A store that sells non-fungible tokens, or NFTs, has disappeared. The prices of NFTs, which are digital collectibles, also plummeted last year. What remains are companies that survived the bear market and are looking to expand their businesses.

“It’s very clear that the period of speculation is coming to an end and all of the companies that appear…are really focused on real-world use cases,” said Teana Baker-Taylor, Circle’s vice president of regulatory policy and strategy, the company behind the USDC stablecoin.

A stablecoin is a type of digital currency that is supposed to be pegged one-to-one with a fiat currency. The USDC is pegged to the US dollar. Circle says it’s backed with real-world assets, like US Treasuries, so a USDC can be redeemed for $1.

Casper Labs, a company that has built a blockchain designed to be used by businesses, is running a space on the Promenade called the Blockchain Lab. Casper Labs was also present last year in Davos.

Cliff Sarkin, head of strategic relations at Casper Labs, said he is “cautiously optimistic” that the crypto market has bottomed out.

“So we’re in the bear market for over a year now, so I think the impact of that has settled and for those of us who have been in the space for years…we feel like this is the time to build.” Sarkin said. CNBC.

He added that the crypto companies that have stayed in Davos are “substantive projects” and “the real deals” versus things like NFTs.

There were also those in traditional finance who were welcoming to fewer crypto companies.

Mark Haefele, chief investment officer at UBS Global Wealth Management, was asked during an event hosted by the Swiss bank what he would like to see in Davos this year. He said that he had already seen it: “It’s less crypto on the high street.”

The mysterious case of the orange bitcoin car

On Monday, a flashy bright orange Mercedes-Benz car was parked outside the Blockchain Hub on the Promenade.

The orange Mercedes was parked along the Davos waterfront. No one around saw who parked it there. The license plate reads “Kuna”, which is the name of a Ukrainian cryptocurrency exchange.

Arjun Jarpal | CNBC

A coin representing one bitcoin was placed where the Mercedes-Benz logo would normally be. On the tires and license plate, the words “in crypto we trust” were printed. The license plate had the Ukrainian flag and the name Kuna, which is the company behind a cryptocurrency exchange of the same name.

Kuna also established the “Ukrainian reserve fund” after the war with Russia started, where people could donate cryptocurrency to Ukraine.

People in the vicinity that CNBC spoke to were unable to verify who parked the car there.

However, two crypto executives who spoke to CNBC were not welcoming to the orange car, particularly after the market crash and industry excesses were exposed. One commented that the presence of such a car did not help the industry’s reputation, which took a hit last year.

CNBC reached out to Semen Kaploushenko, chief executive of the Kuna exchange, via LinkedIn, but has yet to receive a response.

CNBC has also contacted the Ukrainian Blockchain Association, of which Kuna founder Michael Chobanian is president, but has yet to receive a response.

The license plate and tires had the words “in crypto we trust” printed on it.

CNBC | arjun kharpal

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