$1.4 trillion wipeout hits crypto industry at WEF

After the stock market crash in 2023, there were fewer crypto companies along the Davos Promenade than in previous years. Circle, the company behind stablecoin USDC, was one of the few in attendance.

Arjun Kharpal | CNBC

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

But after nearly $1.4 trillion wasted in 2022, the crypto industry has been a bit more reticent about how it injects the cash, and several companies spotted last year are absent. The year 2022 was marked by failed crypto projects, liquidity problems and bankruptcies, crowned by the collapse of the major exchange FTX.

When the World Economic Forum took place last May, Bitcoin has fluctuated around $30,000, having already fallen more than 50% from its all-time high set in November 2021. More pain followed as Bitcoin plummeted to $15,480.

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

A business selling non-fungible tokens or NFTs is gone. Prices for NFTs, which are digital collectibles, have also plummeted over the past year. What remains are companies that have survived the bear market and want to expand their business.

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

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

Casper Labs, a company that has developed a blockchain intended for use by businesses, operates a space on the boardwalk called the Blockchain Lab. Casper Labs was also represented in Davos last year.

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

“So we’ve been in the bear market for over a year so I think the shock of that has been contained and for those of us that have been in the space for years…we feel like this is the time to build up.” , Sarkin told CNBC.

He added that the crypto firms that stayed in Davos are “substantial projects” and “the real deals” compared to things like NFTs.

There were also those in traditional finance who were less welcoming of crypto firms.

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 he’s 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 in front of the blockchain hub on the promenade.

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

Arjun Kharpal | CNBC

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

Kuna also set up the “Ukraine Reserve Fund” after the start of the war with Russia, where people could donate crypto to Ukraine.

People in the area who CNBC spoke to could not determine who parked the car there.

However, two crypto executives speaking to CNBC did not welcome the orange car, especially after the market crash and industry excesses were exposed. One noted that the presence of such a car doesn’t help the industry’s reputation, which took a hit last year.

CNBC reached out to Kuna Exchange CEO Semen Kaploushenko via LinkedIn, but has yet to receive a response.

CNBC also reached out to the Blockchain Association of Ukraine, whose president is Michael Chobanian, founder of Kuna, but has yet to receive a response.

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

CNBC | Arjun Kharpal

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