To say that the crypto ecosystem has been in a bit of a slump would be to undersell the magnitude of events in the past several months. Companies crashed, investors lost fortunes, and trillions of dollars of value were wiped clean from profit and loss statements and balance sheets.
Yet, the crypto ecosystem has remained resilient — even in the depths of the bear market, more than 5,000 attendees flocked to Marina Bay Sands to attend Token2049, Asia’s premier crypto event.
Among all the questions, one was of existential importance to everyone in crypto: how do we rebuild what we have lost? The crypto ecosystem has lost much in the past few months — investor interest, company profits, and worst of all, faith in the ecosystem.
To answer these questions, several prominent crypto executives were invited to speak at a panel to discuss how the crypto ecosystem should proceed.
Taking one step back to take two steps forward
Justin Sun, founder of Tron, was adamant about what crypto finance needed to do to regain its legitimacy and move forward — and that was to look back at traditional finance and learn from it.
“At its core, crypto is the same as traditional finance in that we control and move money. We must learn from these traditional institutions, and adapt some of their practices because we have a huge financial responsibility,” he said.
The reason for this was also because cryptocurrency is a competitor with traditional financial institutions. Without the safeguards and measures that are present within traditional institutions being adapted to the crypto institutions, cryptocurrency will lack the legitimacy and safety that traditional finance enjoys.
This is key to the crypto ecosystem’s success, as Constance Wang, Chief Operating Officer at FTX suggests.
There is no point for crypto to be there if people do not use it, or if blockchain tech is not being adopted on a massive scale. But society as a whole has to move forward. We are trying to help industry players move forward together, both from within the crypto space and within the space of traditional finance.
– Constance Wang, COO, FTX
The mass adoption of crypto and blockchain tech, therefore, relies on the crypto ecosystem rebuilding itself along the lines of traditional finance, and restoring faith that the ecosystem is a legitimate part of the economy, rather than a niche retreat for pariahs.
The future must be stable
Another point that the panellists agreed on was that stablecoins and stablecoin infrastructure will be a key area for development in the next few years. According to Justin, “stablecoins are the best store of value for people in Asia”.
For Saurabh Sharma, partner and head of development at Jump Crypto, stablecoins will provide the launchpad for many people in venturing into the crypto world.
Stablecoins will be one of the major use cases for crypto — it will continue to gain adoption for cryptocurrency as a store of value for many in developing countries, and these adoptions will drive finance in the cryptocurrency world.
– Saurabh Sharma, Partner, Head of Investment, Jump Crypto
Citing the status quo of a US-dollar denominated global economy, Justin pointed out that “many people in Asia do not have access to this stability, and 90 per cent of the population in Asia can only hold their own currency.”
Blockchain technology will therefore help to resolve this issue and gain mass adoption, by helping to solve this real-world problem.
However, Saurabh also cautioned that because stablecoins are issued by private companies as of now, there will be a difficult choice for governments some time down the road. These companies will require regulations as time passes, and even though these companies are drivers of innovation, governments should also be wary of what these companies do.
Regulators are not enemies
While this may be an old message for some, it seems that the panellists are still keen on driving the point home — regulators do not exist to come after companies, nor are they trying to stifle innovation.
As such, the panellists urged crypto companies to engage in open and friendly dialogue with these regulators.
In particular, Constance recounted that a good portion of the time that she has spent speaking with regulators have been in fact, spent on explaining new technologies and ideas to these regulators — especially since the cryptocurrency ecosystem is among the fastest-evolving sectors in the world and that regulators do not always know what is going on.
She also noted that there are encouraging trends from regulators. “Regulators are getting more open-minded, and this is great for everyone,” she said. On that note, she encouraged other companies to proactively communicate with regulators, so that the industry can help to keep governments updated and educated together.
Justin was another proponent of this view, suggesting that the key to getting approval was to keep regulators in the loop and to “make sure that regulators are comfortable enough to allow mass adoption of cryptocurrency”.
The message that Justin sends is that blockchain as a technology is not inherently bad, but it has uses that can be bad. On the flip side, someone might just as easily use blockchain technology for good.
As the crypto world slowly recovers, questions abound as to its future. But at Token2049, these panellists, at least, seem to have a clear vision for how the crypto ecosystem must develop: crypto is in desperate need of mass adoption, on a scale far wider than what we have already seen.
And in the quest to achieve this, cooperation with regulators, learning from past mistakes, and providing real value to people will be key.
While the Web3 world remains to be built and filled with infrastructure and companies belonging to the new age, it seems that the old world is not yet ready to be discarded wholesale, at least not for now.
Featured Image Credit: Token2049
