Bitfinex and Tether CTO Paolo Ardoino has labelled 2022 as the ‘annus horribilis’ for crypto markets as frictions persist.
From an endless litany of bankruptcies, insolvencies and fraud, to hacks and regulatory hurdles, 2022 will go down in history as the worst year for the cryptocurrency sector.
While optimistic, the path remains uncertain, per Paolo’s end of year letter:
The collapse of FTX, the meltdown earlier in the year of Terra Luna and companies like Three Arrows Capital, as well as numerous major hacks of Decentralised Finance platforms, have led to billions in customer losses, shaking confidence in digital assets and blockchain technology. As well as significantly eroding trust, it’s not surprising that recent events have prompted many to question whether our industry has any future at all.
As a company that’s lived, evolved, and grown stronger through multiple downturns in the market, we believe the future for our industry is brighter now than ever. Indeed, the multiple crises we have seen this year will in hindsight mark an inflection point separating the strongest companies that bring real value to their customers and those that do not.
While acknowledging that 2022 revealed unethical behaviour, and a fair amount of incompetence, Ardoino remains optimistic for the future. Looking forward to the new year, Ardoino believes there is light at the end of the tunnel, and Bitfinex is determined to work with the industry to continue building.
Bitfinex is committed to working to further the development of the digital asset industry in a responsible way and we welcome regulation that supports a flexible, risk-based approach to consumer protection. Crucially however, regulation should not stifle innovation and ingenuity. It is important that all parties take a measured and balanced approach to avoid excessive regulatory generalisation, and recognise that the isolated activities of bad actors should not overshadow all the good work that is being done by groups like Bitfinex. Innovation is the hallmark of the industry and it should be nurtured and encouraged so that more value can be brought to communities around the world from Bitcoin and blockchain technologies. Done right, regulation can protect the interests of customers, while allowing the industry to thrive.
The US congress is expected to make a move on stablecoin regulation, after which a focus on crypto securities and commodities segregation may ensue. Coinbase’s Brian Armstrong laid out a possible way forward for regulators and industry players which focuses on easy wins rather than a ‘comprehensive framework’. But it remains to be seen whether regulators change their attitude. The head of the head of the US Securities and Exchange Commission (SEC), Gary Gensler, has yet to approve Grayscale’s Bitcoin ETF conversion, which the company says is beyond its mandate and goes against consumer protection.
To date, the SEC may be partially responsible for capital destruction due to its reluctance to accept the conversion for the largest regulated Bitcoin trust in the United States.
The collapse of FTX and subsequent $250 million bond-bail for now-extradited Sam-Bankman-Fried does not reflect well on this US administration either. A bizarrely lenient treatment for SBF raises some eyebrows, and leaves unanswered questions about Sam and Gensler’s relationship. Ripple CEO Brad Garlinghouse tweeted in response to a Wall Street Journal article that Gensler’s failure to foresee the FTX collapse was ‘shameful’, given that he had met with him multiple times.
Despite these ongoing friction points, however, the pursuit of decentralised money and finance binds all industry players under a common purpose.
Paolo ends the letter with an optimistic view:
So as we look forward to 2023, we hope for a year of greater innovation, more transparency, freedom for everyone not served by traditional technologies and financial systems, and an end to practices that have tarnished our industry and obscured the promise that it holds.
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