Crypto’s ‘Lazarus year’ at Davos

Davos, Switzerland — The cryptocurrency industry is experiencing a moment of resurgence in the Swiss Alps.

Its presence at this year’s World Economic Forum is no doubt diminished compared to the more heady days of crypto hype, following a dramatic price crash and the tectonic implosion of the FTX exchange in 2022.

But some of the biggest crypto players left standing cruised into Davos this week with a powerful wind at their backs. Just days before the elite confab, the U.S. Securities and Exchange Commission approved the trading of investment funds backed by bitcoin. It was one of crypto’s biggest Washington victories after years of clashes with regulators and skeptical lawmakers.

“We all feel that the products and services we are providing have now firmly woven into the fabric of financial services,” Grayscale Investments CEO Michael Sonnenshein said of the big crypto firms present in Davos. His company spearheaded litigation that triggered the SEC’s approval of the bitcoin investment funds.

It underscores how crypto is moving toward a level of global credibility despite the cloud of fraud, mismanagement and reckless speculation that’s hung over the space in the last few years. The approval of bitcoin investment funds in the U.S. — a push supported by some of the heaviest hitters on Wall Street — is just one example of moves by governments around the world to grant legitimacy to digital asset offerings. It’s a sign that the hangover from Sam Bankman-Fried — the FTX founder convicted of cheating customers and investors out of billions of dollars — is passing.

“The funeral dirge is over,” financier and crypto advocate Anthony Scaramucci said in a Davos interview. “This is a Lazarus year.”

The crypto talk around the World Economic Forum is about how digital assets can integrate even further into traditional finance and how the underlying blockchain technology — essentially a souped-up spreadsheet — can be used to track more traditional assets.

To be sure, artificial intelligence is eclipsing crypto on the Davos agenda. AI is dominating the conversation among business leaders. It’s all over the corporate branding that adorns shops along the main Davos promenade, like crypto once was.

“There’s an AI house every block, whereas historically there was a blockchain foundation or a web3 house or a crypto house,” Circle chief strategy officer Dante Disparte told POLITICO. “I take that to mean the technology stack has arrived, when the technology can sort of recede to the background.”

Many crypto executives don’t mind taking a more low-profile approach in the wake of Bankman-Fried’s dramatic rise and fall.

As Ripple global head of public policy Rob Grant said: “Boring is good.”

While crypto continues to battle with SEC Chair Gary Gensler and Sen. Elizabeth Warren over consumer protection and financial crime concerns, industry executives at Davos say the environment at the WEF is much more inviting. It’s an opportunity for them to pitch the benefits of digital assets to other world leaders who may be more open-minded.

Coinbase chief policy officer Faryar Shirzad said Monday that the crypto exchange had meetings scheduled with three prime ministers and 10-15 ministers.

“The governments that we’re interested in talking to, the level of interest on their side is typically quite high,” he said. “It’s not as though the Elizabeth Warren attack on us defines how we engage with most governments.”