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$1.4 trillion wipeout hits crypto industry at WEF

Along the Davos promenade in 2023, there were fewer crypto companies than in previous years after the market crash. Circle, the company behind the stablecoin USDC, was one of the few present.

Arjun Kharpal | CNBC

DAVOS, Switzerland — Over the past few years at the World Economic Forum in Davos, Switzerland, the number of participants in the cryptocurrency industry has increased.

But after a near-$1[ads1].4 trillion demise by 2022, the crypto industry is a bit more restrained in how it splashes the cash, and several companies discovered last year are absent. 2022 was marked by failed crypto projects, liquidity problems and bankruptcies, topped by the collapse of the major exchange FTX.

When the World Economic Forum was held last May, bitcoin hovered around $30,000, after falling more than 50% from its all-time high hit in November 2021. More pain followed with bitcoin sinking as low as $15,480.

The Promenade is the main street in Davos where businesses and authorities take over shops and cafes for the week. Last year, crypto firms from all walks of life took over the place. But since the market crashed, there are far fewer crypto firms with flashy storefronts in Davos.

A store selling non-fungible tokens, or NFTs, has disappeared. The prices of NFTs, which are digital collectibles, also plunged last year. What remains are companies that survived the bear market and want to expand their business.

“It’s very clear that the speculation period is coming to an end, and every company you see featured … is really focused on real-world use cases,” said Teana Baker-Taylor, vice president of policy and regulatory strategy at Circle, the company behind USDC stablecoin.

A stablecoin is a type of digital currency that is intended to be linked one-to-one with a fiat currency. USDC is pegged to the US dollar. Circle says it is backed with real-world assets like US Treasurys, so one USDC can be redeemed for $1.

Casper Labs, a company that has built a blockchain designed to be used by businesses, operates a space on the Promenade called the Blockchain Lab. Casper Labs was also present in Davos last year.

Cliff Sarkin, head of strategic relations at Casper Labs, said he is “cautiously optimistic” that the crypto market has bottomed out.

“So we’re over a year into the bear market, so I think the shock of that has set in and for those of us that have been in the area for years … we feel like this is the time to build,” Sarkin told CNBC .

He added that the crypto firms left at Davos are “substantive projects” and “the real deals” versus things like NFTs.

It was also those in traditional finance that accepted fewer crypto firms.

Mark Haefele, chief investment officer at UBS Global Wealth Management, was asked at an event organized by the Swiss bank what he would like to see in Davos this year. He said he had seen it already: “There’s less crypto on the high street.”

The Mysterious Case of the Orange Bitcoin Car

On Monday, a flashy bright orange Mercedes-Benz car was parked outside the Blockchain Hub on the Promenade.

The orange Mercedes was parked along the Promenade in Davos. No one nearby saw who parked it there. The license plate says “Kuna”, which is the name of a Ukrainian cryptocurrency exchange.

Arjun Kharpal | CNBC

A coin representing one bitcoin was placed where the Mercedes-Benz logo would normally be. The words “in crypto we trust” were printed on the tires and license plate. The license plate had the Ukrainian flag on it and the name Kuna, which is the company behind a cryptocurrency exchange of the same name.

Kuna also created “Ukraine’s Reserve Fund” after the war with Russia began where people could donate crypto to Ukraine.

People nearby that CNBC spoke to could not confirm who parked the car there.

However, two crypto executives who spoke to CNBC did not welcome the orange car, especially after the market crash and industry excesses were exposed. One noted that the presence of such a car was not helpful to the industry’s reputation, which took a hit last year.

CNBC reached out to Semen Kaploushenko, CEO of the Kuna exchange, via LinkedIn, but has yet to hear back.

CNBC also reached out to the Blockchain Association of Ukraine, of which Kuna founder Michael Chobanian is president, but has yet to hear back.

The license plate and tires had the words “in crypto we trust” printed on them.

CNBC | Arjun Kharpal

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