Consensus 2022: Web3, decryption regulations, and optimism for the future of cryptocurrencies

During Consensus 2022, "everything is bigger in Texas" proved true. The crypto conference, which took place this year in Austin, Texas, from June 9-12, attracted 17,000 people from around the globe despite weather in excess of 100 degrees. The lead-up to Consensus 2018 at the New York Hilton hotel attracted nearly 9,000 attendees, according to event sponsors.

Caitlin Long, CEO of Wyoming-based digital asset bank Custodia, told Cointelegraph that this year’s event is significant. "New York has caused a lot of people in this industry to flee to places like Austin, Wyoming and Miami. It will be interesting to see if New York makes a comeback."

In addition to the new location, the current market situation was another decisive factor for the event. However, attendees remained optimistic about the overall crypto ecosystem. Overall, the rise of new projects and Web3 is the main talking point, not cryptocurrency prices. Ray Youssef, founder and CEO of peer-to-peer cryptocurrency marketplace Paxful, told Cointelegraph that crypto winter should begin the building phase, which he fully supports. "We're now seeing some projects building real and robust platforms."

Building a Crypto Ecosystem in a Bear Market

According to Youssef, Web3 and new tools to advance the crypto ecosystem are hot topics of discussion. For example, Meltem Demirors, chief strategy officer at digital asset investment firm CoinShares, told Cointelegraph that despite the bear market, she has seen an increase in interest in different aspects of the crypto industry:

“I’m seeing different crypto spaces now, some of which I haven’t even heard of. Like STEPN, which is a movement that makes money on mobile. The music NFT and fashion NFT scenes are also very popular here. A newer community to get involved in, but it's really fun to see them come together and have their own event."

Demirors delivered a keynote address at the event about cults and how the crypto community currently creates shared identities, belief systems, and lifestyle rituals around emerging projects. “Cults usually have negative connotations, but there is a huge crisis of meaning in the world today. People no longer care about their profession, religion or nationality. Cryptocurrencies are filling this interesting role, bringing people together through memes, capitalism and community values.” together," she explained. As such, Demirors noted that she believes "crypto cultism" is attracting a lot of people because it provides a sense of purpose as well as capital. "There's an interesting convergence going on," she said.

While the crypto space continues to attract more players, Algorand Foundation CEO Staci Warden told Cointelegraph that Alogrand sees this crypto winter as an opportunity to build. "We think there's going to be some shakeup in the industry and we're ready to innovate," she said.

Specifically, Warden explained that one area of focus for the Algorand community is what Web3 means for financial inclusion. “In Web2, everything came back to the giant platform, but with Web3, creators and contributors are incentivized and rewarded for their participation.” Warden shared that with the rise of Web3, Algorand “focuses on Real-world use cases for financial inclusion and monetization of creator work." Web3 is also impacting many mainstream industries such as fashion and the creator economy. Justin Banon, co-founder of Boson Protocol, a decentralized business network, articulated this point, telling Cointelegraph that last year, the crypto industry witnessed an NFT boom, which prompted the participation of the fashion industry.

"Physical fashion is not going away, but digital fashion is coming. It's clear that the two will come together as aspects of the same thing," he said. Banon also mentioned that most people in the world will undoubtedly spend more time in the digital world, which is why he believes there is a need for digital fashion. "This will allow us to identify and differentiate ourselves," he said.

Regarding the creator economy, Solo Ceesay, co-founder of Calaxy, an open social marketplace for creators, told Cointelegraph that Calaxy recently raised $26 million in strategic funding to expand its operations and development efforts.

While the emergence and growth of Web3-focused projects is noteworthy, it's also important to point out that current market conditions have been challenging for the other major players. Peter Wall, CEO of cryptocurrency mining firm Argo Blockchain, told Cointelegraph that many Bitcoin miners raised equity capital in 2021, but given the bear market, this has become difficult for some.

“Miners only have two ways to raise capital right now, either through debt or by selling bitcoin,” he said. While that may be the case, Wall detailed that only miners with a proven track record are eligible for loans. "They need to be able to execute against a well-defined plan while not getting overly committed to buying machines and bills they can't pay."

Cryptocurrency Regulatory Environment in the United States

Regulations were also discussed in depth at the meeting. This is not surprising, given that it was preceded by a series of key regulatory events. For example, the bipartisan Cryptocurrency Act, also known as the Responsible Financial Innovation Act. The bipartisan bill, sponsored by Wyoming Sen. Cynthia Lummis and New York Sen. Kirsten Gillibrand, “addresses the jurisdiction of the CFTC and SEC, stablecoin regulation, banking, tax treatment of digital assets, and interagency coordination, according to a statement. "

Sen. Pat Toomey, the ranking member of the Senate Banking Committee, told Cointelegraph that he thinks the bipartisan bill is “fantastic,” further noting that it has nuances in how it handles stablecoins compared to the one he drafted in April. Slightly different. Toomey added that while he has yet to publish the bill, there are "bridgeable gaps" between his draft and Lummis and Gillibrand's legislation:

"Kirsten Gillibrand said on our panel that we could bridge those differences on some of the things I said, but having a Democratic and a Republican senator introduce a fairly comprehensive bill that would sensibly create a regulatory framework designed to It's also very constructive to have this field flourish. From that perspective, I think it's very constructive."

Echoing Toomey, Long referred to the bipartisan bill as an important advance for the crypto industry, saying: “This is a bill to watch in Washington. There are now 50 different crypto bills in Congress, and only one is sponsored by the state of New York.” Wyoming is a leader in digital assets, backed by senators and senators on the Senate Banking Committee of Wyoming. It’s a great combination.”

Long added that stablecoin regulation and central bank digital currencies (CBDC) will be major topics of discussion this year. For example, while President Biden issued an executive order in March 2022 calling for the development of a potential U.S. central bank digital currency, Long said she does not believe the U.S. will issue a CBDC. "The Federal Reserve is only six months away from launching FedNow by the end of the year. However, no rules have been disclosed, so we don't know what that will look like."

Additionally, Long predicted that stablecoins will be a major focus for regulators, noting that Wyoming’s special purpose depository regime and the New York State Department of Financial Services’ (DFS) regulatory guidance on dollar-backed stablecoins issued by DFS-regulated entities are among this kind. However, Long explained that “it will be a few years before we really see what happens” with laws actually passed on stablecoins. She further noted that there is an opportunity for regulators to develop regulations around stablecoins, but has yet to act. she says:

"Regulators are putting on hold legitimate applications from parties seeking licenses, while scams are proliferating in this industry. It's tough, but I firmly believe the regulators could have acted sooner. If they had, many people would not have been harmed. "

Regarding Long’s view, Toomey said that he believes there is now pressure and momentum to pass stablecoin legislation. "U.S. Treasury Secretary Janet Yellen said before the Banking Committee that we should do this this year, and I think that's realistic," Toomey said. He added that the pressure has been heightened by the recent collapse of the Terra ecosystem.

Optimism remains strong

Given the current state of the cryptocurrency market, it is worth noting that many ecosystem players remain optimistic about the future. In particular, the cryptocurrency community in Austin seems to be thriving, as it has become a hotspot for crypto mining companies and many Web3 projects.

Patrick Stanley, core contributor to CityCoins — a cryptocurrency project already live in New York State and Miami — told Cointelegraph that AustinCoin (ATX) can be activated at any time, noting that there are currently A group is working on a proposal to get new CityCoins up and running.

“We want to launch AustinCoin more deliberately. We already have people in Austin, we have funds, and we have a clear commitment. We just want to make sure of all of that before activating AustinCoin.” Stanley added that Austin Mayor Steve Adler is a “ Crypto Progressive,” noting that he understands that CityCoins will leave a smaller footprint than getting big tech to move to Austin. “CityCoins are like getting tax revenues for big corporations without increasing the floor space and real estate. This is very attractive to the mayor of Adler,” he shared.

Demirors also noted that she is excited about advancements in crypto infrastructure, such as new data centers, semiconductors, and the overall "plumbing" that makes cryptocurrencies and any technology work. "We need to make sure that the US is a friendly jurisdiction where people can develop not only software but also hardware for mass deployment," she said.

While Demirors acknowledges that most of the current legislation has not been drafted around this, she hopes that Texas and other states will continue to welcome moves like mining. Demirors also pointed out that consumer and financial privacy rights are not considered in cryptocurrency regulations, noting that most of these bills require more financial oversight. “I think it’s important for us as an industry to push that forward, especially in a world where CBDCs are being explored.”

Finally, it is important to point out that the crypto industry is continuing to attract key players to help progress. For example, Grayscale Investments recently hired former U.S. Attorney General Donald B. Verrilli to the firm to help promote a spot bitcoin exchange-traded fund (ETF). Verrilli mentioned at Consensus’ press conference last week that he’s trying to take public policy and push it in a constructive direction.

As such, Verrilli aims to convince the U.S. Securities and Exchange Commission (SEC) to convert Grayscale’s Bitcoin Trust (GBTC) into a spot-based ETF. To do this, Verrilli explained that it would be “arbitrary and capricious” to approach similar cases differently, in which he referred to the SEC’s approval of a bitcoin futures ETF rather than a bitcoin spot ETF. "It seems like a common sense point. I'm not new to this, but so far it's hard to see any arguments to treat these things differently."