Crypto will remain a key technology, says WEF – News

WEF, a global non-governmental foundation, said in a blog that the increasing involvement of traditional banking institutions like JPMorgan will help the crypto sector become more mature and predicts that cryptocurrencies will enter the digital financial system



The year 2022 was a terrible year for crypto, as more than $2 trillion in largely speculative market value disappeared, the WEF noted.

The year 2022 was a terrible year for crypto, as more than $2 trillion in largely speculative market value disappeared, the WEF noted.

Published: Sun, January 8, 2023, 4:28 p.m

The World Economic Forum (WEF) has predicted that cryptocurrency adoption will skyrocket as an important part of the digital financial system, but warned that 2023 will not be any better.

WEF, a global non-governmental foundation, said in a blog that the growing involvement of traditional banking institutions like JPMorgan will help the crypto sector become more mature, and predicts that cryptocurrencies will enter the digital financial system. And looking ahead, the crypto industry is hoping for a strong recovery this year, as new regulations take effect, making the cryptocurrency space safer.

The WEF blamed regulatory authorities for their failure to prevent the collapse of many crypto businesses resulting in the crypto winter phase. The report states that the current bad situation in the crypto market is very similar to the Dot-com bubble and will surely bring a new phase for this innovative market with established institutional players.

The forum believes that the catastrophic year that 2022 represented for the cryptocurrency industry can lead to growth and recovery of the ecosystem. A blog written by Dante Disparte, chief strategy officer and head of global policy, Circle Internet Financial, explains that the recent fall of FTX and the demise of the Terra blockchain have affected millions of consumers in 2022 — with a market loss of $2 trillion that period — this has not changed the core of these technologies, which are currently being tested by financial institutions around the world.

While the underlying technology of cryptography and blockchain can be generalized to all industries and coordination activities (together integral parts of Web3), experimentation at the heart of financial services, among other sectors, continues unabated, Disparte says.

Disparte cites JPMorgan as an example of this, as a company that has publicly pivoted from clearly opposing crypto and blockchain to adopting the technology in several of its experimental products and offering crypto to select customers.

For the WEF, the best course of action to sustain crypto and blockchain is to “mitigate their harmful effects by putting the technologies (as well as all tools) in the hands of responsible actors and encouraging their responsible use.”

Disparte believes that crypto, no matter what, remains a protagonist in the financial world and that while regulation is indeed necessary, countries that are able to provide it while maintaining a competitive approach will shape the future of the industry. Disparte claims that these technologies will continue to be used despite what he considers to be great harm done by their irresponsible use.

The year 2022 was a terrible year for crypto, as more than $2 trillion in largely speculative market value disappeared, the WEF noted.

“Millions of consumers and businesses have lost money, but perhaps more damaging to the emerging industry and technology has been the erosion of fundamental trust in the promise of crypto-finance, which was supposed to right many of the wrongs that led to the 2008 financial crisis. This trust is now waning.”

“Meanwhile, policymakers who sounded the alarm about the excessive risks of cryptocurrencies, while failing to create sensible regulations, have been vindicated by not one, but multiple large-scale failures,” Disparte wrote.

The blog said that the dot-com bubble that burst in the early 2000s caused the future of the World Wide Web and the Internet to land in the hands of longer-lived companies. Likewise, perhaps 2022 will mark the handing over of cryptotechnology and Blockchain infrastructure into more stable hands now.

Indeed, as a test of the durability of digital assets and Blockchain at the core of financial services (and other areas of the global economy), look at what the big banks and mature financial services companies are doing, not what they are saying,” Disparte wrote. .

“Herein lies the regulatory and political conundrum with the epic crypto failures of 2022. Countries that enable responsible competition will shape the future. “Cryptography and Blockchains will continue to be integral parts of the modern economic toolbox, despite the great damage these tools have been able to cause when used by the wrong people,” the blog said.

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