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Crypto is back — in Davos, at least — as the Redemption Tour launches

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DAVOS, Switzerland — As the World Economic Forum’s annual billionaire- and braggart-filled gathering kicks off this week, a redemption party is in full swing. A red carpet crowd spread out outside the whiskey tasting at the “Blockchain Hub”.

“Restoring trust in digital assets,” reads a sign outside.

Whiskey had its work cut out for it.

After a year of massive losses, arrests and legal troubles, many of the world’s biggest cryptocurrency and blockchain companies returned to Davos this year, hoping to bolster — or, if necessary, revive — 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 pitched itself as an alternative to traditional banking, beyond the reach of governments and financial institutions. And while some key players — including Tether, a crypto giant that has passed out free pizza at at least this year’s conference — are absent this week, many others are doubling down on their presence here, both at official panels and in private shops, yoga studios and churches that are promoting events for the week. converted into space.

“We are coming in with guns blazing,” said Dante Disparte, chief strategy officer for Circle, a digital currency and payments company. He added, “2022 was crypto’s dot-com-bust moment. Now we’re bringing in key executives and putting out tons of content that shows technology is here to stay. It is durable. It is an important part of the modernization of the global financial system. It’s an agenda-setting moment that matters.”

Is crypto a house of cards?

The company, which issues the widely used cryptocurrency in the U.S. dollar, doubled its investment in Davos this year, with two storefronts on the main drag and more than a dozen employees. Like many of its peers, Circle is focusing on issues like trust and responsibility this year, calling it a “great reset” period for crypto.

That reset comes on the heels of a turbulent year for the industry. Cryptocurrencies like Bitcoin have lost more than half their value in the past year. All the firms 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 price has fallen sharply over the past year, falling from $45,000 in March to around $16,000 in November. But it has staged a bit of a revival in recent days and is trading above $21,000 this week, giving its proponents a burst of optimism.

The ‘crypto winter’ has arrived. And it looks a lot like the Ice Age.

At the same time, government regulators have begun combing through the industry with renewed urgency, issuing fines and subpoenas.

As a result, many blockchain companies, which provide information-storing technology to power the crypto market, are focusing on more neutral issues like sustainability and innovation. The circle building is decorated with the tagline: “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 terms of FTX, we have a real opportunity,” said Nilmini Rubin, head of global policy at Hedera. “You see the bad actors move away and what you’re left with are more stable, well-regulated crypto players. It’s an opportunity to reclaim what crypto is and what it can be.”

Still, some question the optics of spending so much at Davos when so many people, as well as pension funds and venture capital, have had their investments wiped out.

“When FTX collapsed, some of the biggest criticisms of the industry were about its excesses: excessive partying, celebrity culture, the gentrification of the whole lifestyle,” said Yesha Yadav, a Vanderbilt University law professor whose work focuses on cryptocurrencies and financial markets. “So, at this point, doubling down on the same things in Davos — that’s a shock.”

Criticism, however, is not limited to one industry. The annual gathering here has been a frequent target of critics who say it is tone-deaf and superficial, a place for elites to debate lofty issues like global unity and climate change with little action. This year, war in Ukraine and heightened fears of a global recession dominated much of the conversation at both official events and lavish afterparties.

Meanwhile, big-name regulars, including Amazon, Microsoft and Facebook parent Meta, continue to have a prominent presence here despite recent layoffs of thousands. Salesforce, which this month announced plans to cut about 8,000 jobs — or 10 percent of its workforce — has three storefronts on the sacred promenade, the most of any company. (Amazon founder Jeff Bezos owns the Washington Post.)

Can Davos save the world, or put it out of its misery?

Crypto’s outsized presence at Davos began last year, when currencies like Bitcoin and Ethereum were flying high. The conference devoted two official panels to blockchain technology, and companies spent heavily on advertising and honking. Large billboards with buzzwords like “Blockchain” and “Web3″ filled the streets and surprised many day-long conference-goers.

This year, that presence is even bigger: the official program includes seven blockchain sessions, including panels and digital tokens.

“It’s an area where we’re spending a lot of time,” said Brynlee Lee, head of blockchain and digital assets at the World Economic Forum. “Crypto is not always an inviting topic, but we want to demystify it to show that what you see in the headlines is not about the technology.”

Many in the industry say the recent uproar is just a blip. They call this moment “crypto winter”, arguing that the recent cold is a cyclical correction in a market that will quickly bounce back. But skepticism remains, especially among those in government and mainstream finance.

“This looks like the last gasp for crypto,” said the Harvard University economist, former Obama adviser and frequent World Economic Forum attendee who skipped the meeting this year. “It’s like an ad I saw in a magazine saying the real estate market has never been hotter. You know those people paid for that ad six months ago and when it came out, it was wrong and off. It’s crypto at Davos.”

The companies that helped create the ‘Crypto Winter’ of 2022

But industry executives say the spotlight from Davos, as well as its relationship with financial corporations and global governments, has become more important to the industry this year, as regulators introduce new rules and tighten oversight. According to an analysis by the Center for Responsive Politics, crypto companies spent $7.1 million on lobbying in 2021, up from $2 million the previous year.

“What the crypto industry really wants is to be established — to be integrated with mainstream money, 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 has become more pressing. So what better place than Davos?”

Back at the Blockchain Hub — funded by Casper Labs, a branch of cryptocurrency issuer and blockchain company Casper — the whiskey tasting was one of more than 50 events planned over four days. Hours earlier, Anthony Scaramucci, founder of SkyBridge Capital, which purchased $10 million worth of FTX tokens, spoke on a panel about his fall with the company’s embattled founder, Sam Bankman-Fried.

“I have to say, betrayal and fraud — it’s so bad on so many levels,” Scaramucci said. “It struck me as respectable. When you have a friend who betrays you like that, it’s really sad. But that doesn’t mean it’s the end of blockchain or crypto.”

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Down the block, city billboards carry messages. “Escape the hell of controlling banks and governments,” says one promoting a crypto castle in Germany. Another, near a parking lot, proclaims the world’s richest man: “Crypto is not for wealth, but for freedom. And freedom is wealth.”

Tori Neumeier and Julian Mark contributed to this report.

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