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DAVOS, Switzerland — Blockchain, not cipher.
Whether it is supporting climate solutions, providing humanitarian assistance to Ukraine, or moving forward after the FTX crash, the second day of the 2023 annual conference of the World Economic Forum saw highly focused discussions on the promise of underlying cryptocurrency technology, instead of financial assets that are often speculative.
The day started with a panel of traditional finance actors trying to draw a line beneath the scandal ftx – note that, despite the fact that this is a crisis for the cryptocurrency industry, this is not a crisis for other tools based on distributed GL technology.
'It is important not to confuse cryptocurrencies with cbdcs, stablecoins and dlt.... They are very different," said Dan Schulman, President and Chief Executive Officer at paypal.
Despite the crypto accident, "the underlying technology worked flawlessly," Schulman said. 'The promise of a distributed register is that it can be quicker and cheaper, so that transactions can be settled simultaneously without intermediaries. That’s an important thing.”
It is important, unlike the earlier waves of "blockchain, not Bitcoin," which mainly refers to authorized blockchains, Tuesday's conversations were in agreement with public books like Ethereum and the Stellar network.
Lynn Martin, Chairman of the NYSE, seems to be taking a similar approach – citing the potential benefits that blockchain could bring to make issuing shares more effective, or allow financial transactions to be settled immediately rather than within a few days.
"There is a way now that some of the technologies have been adopted and used to really make the processes a lot more effective," Martin said.
This promise of broader blockchain applications was later taken up by the former governor of Raghuram Rajan Central Bank of India. But at the end of the day, Tradfi's commitment to the industry can have its limitations: on demand, schulman, Martin and Ronald O'Hanley all said that the technology they were most interested in was AI, not blockchain.
Just opposite the main conference centre of the forum, in a historic church that has been transformed into a neon centre for future discussions, carmen hutt, Treasurer of the UNHCR, detailed such a request – a recently launched blockchain payment solution for the delivery of humanitarian assistance in Ukraine.
pilot project, which was rolled out in December with blockchain platform Stellar network, is at a far more advanced stage than one would expect, Hutt explained during a panel discussion moderated by CoinDesk chief content officer Michael Casey. Donating to the blockchain promises "transparency and visibility," and the Commission has a platform ready to roll out aid instantaneously, Hutt said.
It's an incredible suggestion... If we had $500M to roll out, we could do it today. This process will not take weeks and months," said Ms. Hutt. (Later that day, Ukraine’s deputy prime minister lauded virtual currency’s contribution to the war effort.)
Further down the famed “promenade” big industry names from Solana and Ripple to the Global Blockchain Business Council banded together to launch a climate initiative that channels blockchain’s transparent record-keeping to help improve carbon emissions and credit tracking.
Consumer protection
While regulators have so far focused to a large extent on the threat of contagion from cryptography to financial stability, Last year's bankruptcies, which caused billions of dollars in retail investment to disappear – Sam Bankman-Fried's FTX, among others – may have stressed the necessity of a change of direction.
For the lonesome banker from the traditional financial panel, the events of 2022 must ensure that regulators stop being obsessed with lenders who are causing the entire financial system to collapse, and more with respect to the potential for consumers to be scammed by crypto scams.
“It’s not that the regulators have ignored [financial innovations], they’ve said if it’s not going to create systemic risk then I’m not going to focus on it,” said Ronald O'Hanley, chairman and chief executive officer of State Street.
“FTX has arrived, somewhere between $2 trillion and $3 trillion worth has been destroyed... one million investors or participants who have been injured," he said. "Regulatory mindsets need to be changed."
The notion that regulators could divert attention was raised at a separate round table organized by stablecoin Circle, including in the United Kingdom, It is currently looking at how to regulate cryptography under its proposed financial services and markets act.
"This year's focus is really on protecting consumers," said Isabella Chase, Senior Policy Advisor at TRM Labs. " Unfortunately, the UK is a veritable hub for fraud and scams, and governments are very much aware of this, as this is a real human cost to them."
Ministers at the Treasury in London are due to issue a consultation on crypto laws imminently. The United Kingdom regulator has already said that investors need clear and visible warnings when purchasing crypto services. Legislators, preoccupied with the impact on clients who can include their constituents, can now be influenced by the collapse of ftx by being even stronger.
Other panellists were concerned that regulators are starting to take an overly broad approach to regulating the sector, as opposed to the EU, Financial instruments are differentiated, stablecoins, non fungible and other tokens utilizing similar technology.
“Frankly, Europeans are trying their best these days," said Lee Schneider, Attorney General of Ava Labs, to say, unlike countries like Singapore, Japan or Hong Kong were "just a kind of saying that all crypto assets are a uniform asset class.”
Everyone knows that's not true.
Read more: Davos 2023: Crypto Is Down but Not Out
