The crypto winter has helped clean out “unsavory operators” in the industry, Marathon Digital’s chief executive has said.
Speaking at the Financial Times’s Crypto and Digital Assets Summit, Fred Thiel compared last year’s market upheaval to the dot-com boom, which saw an “initial hype cycle” give way to a “commercialization phase.”
“I think this period of stress that the crypto market has gone through is cleaning out a lot of unsavory operators,” the executive, whose company operates Bitcoin mining rigs, said. “It's also forcing the regulators to react, which otherwise they would have been too slow to do.”
He went on to praise the regulation efforts of the EU, UK, Hong Kong, Singapore, and the UAE, and said that the U.S. is “kind of a laggard in all of this.”
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Coinbase’s CEO Brian Armstrong appears as bullish as ever on crypto regulations in the UK. “The UK is moving fast on sensible crypto regulation to both drive economic growth AND consumer protection,” he said in a tweet picturing himself alongside the UK’s Economic Secretary and City Minster Andrew Griffith. “Excited to keep investing in the UK.” The crypto exec also took the occasion to boost a bit of thought leadership from the exchange, which describes the UK as a “Web3 innovation hub.” Griff...
“Eventually, we’ll catch up,” he said. “And I think we’ll eventually have a global regime.”
Another factor contributing to a more commercialized crypto industry, Thiel said, will be higher interest rates, making investors more risk-averse.
“You have to realize that when money was cheap and free, risk assets were very attractive," he said. "We're going to be a period here for a number of years where effective interest rates will be 4%, and so people are going to need to evaluate these assets in a different way.”
‘Healthy part of capitalism’
Last year’s high-profile crypto collapses have had knock-on impacts on the rest of the crypto sector, with the number of firms that have gone bust continuing to grow.
Exchange Bittrex became the latest example yesterday when it filed for Chapter 11 bankruptcy protection.
Speaking at the same conference on Tuesday, Blockchain Association CEO Kristin Smith quipped that it was “probably a good time to be a bankruptcy attorney.”
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Kristin Smith is Executive Director of the Blockchain Association, which advocates for crypto policy in Washington D.C.—an exhausting effort that Sam Bankman-Fried was closely involved in, until he set it all on fire. Kristin tells Dan Roberts and Stacy Elliott how SBF and FTX set things back, but there are still positive signs from crypto friendly voices in Congress. Watch and make sure to subscribe to the gm podcast on Apple or Spotify.
Like Thiel, she said there could be positive side-effects from the rout of crypto firms, arguing it was “healthy to clean up bad management” and that there would be opportunities for other players to buy up parts of collapsed firms.
“I think this is a healthy part of capitalism, right?” she said. “If there was a firm that was mismanaged, we can find a way to put the pieces back together or separate the pieces and divide them up.”
