Whiskey had work to do.
After a year of great losses, arrests and unraveling legal difficulties, many of the world’s biggest cryptocurrency and blockchain companies returned to Davos this year, hoping to boost — or revive, if necessary — the industry’s image and attract new investors.
The annual gathering of the world’s elite — known for its concentration of billionaires, bankers and heads of state — has become an unlikely destination for an industry that has long presented itself as an alternative to traditional banking, beyond the reach of government and financial institutions. And while some key players — including Tether, the crypto giant that has been handing out free pizza at least at its annual conference — are missing this week, many others are doubling down on their presence here, both on official panels and in private shops, yoga studios and churches they’ve turned into spaces for promotional events during the week.
“We’re coming in guns blazing,” said Dante Disparte, chief strategy officer of Circle, a digital currency and payments company. He added: “2022. was the moment of the downfall of cryptocurrency. Now we’re bringing in key executives and putting out a lot of content that shows the technology is here to stay. It is durable. It is a key part of the modernization of the global financial system. This is an important moment to set the agenda.”
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The company, which issues a widely used cryptocurrency pegged to the US dollar, has doubled its investment in Davos this year, with two showcases in the major currency and more than a dozen employees. Like many of its peers, Circle is focusing on topics such as trust and accountability this year, calling this a period of the “great reset” for crypto.
That reset comes after a turbulent year for the industry. Cryptocurrencies such as bitcoin has lost more than half its value in the past year. Entire companies have collapsed — most notably the $32 billion cryptocurrency exchange FTX, whose spectacular implosion in November landed its founder in jail and raised larger questions about the industry’s long-term survival.
Bitcoin’s value has plummeted in the past year, from more than $45,000 in March to around $16,000 in November. But it has seen a bit of a revival in recent days and traded above $21,000 this week, giving its advocates a burst of optimism.
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At the same time, state regulators are beginning to comb the industry with new urgency, issuing fines and subpoenas.
As a result, many blockchain companies, which provide the technology to store information to power the crypto market, focus on more neutral topics such as sustainability and innovation. The Circle building is emblazoned with the slogan: “Solving real-world problems.” Hedera, which has a token that has lost 80 percent of its value in the past year, bills itself as “the greenest blockchain.”
“In light of FTX, we have a real opportunity,” said Nilmini Rubin, Heather’s head of global policy. “You see the bad actors disappear and what you’re left with are more stable crypto players that are better managed. This is an opportunity to reclaim what crypto is and what it can be.”
Still, some question the optics of the big spend in Davos at a time when so many people, as well as pension funds and venture capital, have lost their investments.
“When FTX collapsed, some of the biggest criticisms of the industry were about its excesses: the excessive partying, the celebrity culture, the luxury of the whole lifestyle,” said Yesha Yadav, a law professor at Vanderbilt University whose work focuses on cryptocurrencies and financial markets. “So at this point, to double down on those same things in Davos — that’s shocking.”
However, criticism is not limited to one industry. The annual gathering here is a frequent target of critics who say it is tone-deaf and superficial, a place where elites discuss lofty topics such as global unity and climate change and take little action. This year, the war in Ukraine and heightened fears of a global recession continued to dominate much of the conversation, both at official events and after-parties with drinks.
Meanwhile, big regular names including Amazon, Microsoft and Facebook’s parent company Meta are still a prominent presence here despite thousands of recent layoffs. Salesforce, which this month announced plans to cut about 8,000 jobs — or 10 percent of its workforce — has three storefronts, the most of any company, on the hallowed promenade. (Amazon founder Jeff Bezos owns The Washington Post.)
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Crypto’s big presence at Davos started last year, when currencies like bitcoin and ethereum were on a high. The conference devoted two official panels to blockchain technology, and companies spent heavily on advertising and hobnobbing. Large billboards with familiar words like “blockchain” and “Web3” filled the streets and surprised many longtime conference visitors.
This year, that presence is even bigger: there are seven blockchain sessions in the official program, including panels on regulation and digital tokens.
“This is an area where we spend a lot of time,” said Brynly Llyr, the World Economic Forum’s head of blockchain and digital assets. “Crypto is not always a glamorous topic, but we want to demystify it to show that what you see in the headlines is not what technology is all about.”
Many in the industry say the latest turmoil is just a blip. They have dubbed this moment “crypto winter”, arguing that the recent cooling is simply a cyclical correction in a market that will quickly recover. But skepticism remains high, particularly among those in government and mainstream finance.
“This looks like the last gasp for crypto,” said Jason Furman, a Harvard University economist, former Obama adviser and frequent World Economic Forum attendee. who skipped the meeting this year. “It’s like the ad I saw in the magazine that said the real estate market has never been hotter. You know these people paid for that ad six months ago, and when it came out, it was just wrong and wrong. It’s crypto in Davos.”
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But industry leaders say the glamor of Davos, as well as its ties to financial corporations and world governments, have become even more crucial to the industry this year, as regulators introduce new rules and tighten oversight. Crypto companies spent $7.1 million on lobbying in 2021, up from $2 million the year before, according to an analysis by the Center for Responsive Politics.
“What the crypto industry really wants is to establish itself — to integrate with mainstream finance, to be regulated, but on its own terms,” said Hilary Allen, a law professor at American University. “It wants the patina of regulation to attract new investors. The need for new money became more dire. So what better place to go than Davos?”
Back at the Blockchain Hub — which is funded by Casper Labs, an arm of cryptocurrency issuer and blockchain company Casper — the whiskey tasting was one of more than 50 events planned over four days. A few hours earlier, Anthony Scaramucci, the founder of SkyBridge Capital, which bought $10 million worth of FTX tokens, spoke on a panel about his conflict with the company’s founder, Sam Bankman-Fried.
“I have to tell you, betrayal and fraud — it’s bad on a lot of different levels,” Scaramucci said. “It hurt my reputation. When you have a friend who betrays you like that, it really sucks. But that doesn’t mean it’s the end of blockchain or crypto.”
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Down the block, city billboards are on message. “Escape the hell of bank and government controls,” says one promoting Crypto Castle in Germany. Another, near the parking lot, announces to the world’s richest: “Crypto is not for wealth, but for freedom. And freedom is wealth.”
Tory Newmyer and Julian Mark contributed to this report.