The promise of crypto has not lived up to initial excitement

“TWO years ago everyone wanted to be us. Now everyone hates us,” laments a 24-year-old crypto founder at a gathering in New York. After once seeming as if it might threaten to remake the entire financial system, crypto has gone through a spectacular decline. The market value of all cryptocurrencies ballooned from US$250 billion at the start of 2020 to US$3 trillion by late 2021. But it has since fallen back to just US$1.3 trillion. Even more importantly, public trust in crypto has hit rock bottom after a string of high-profile swindles and crashes, notably the downfall of FTX, a popular cryptocurrency exchange, in November 2022.

Yet in Dubai, crypto talk remains boisterous. The emirate has opened its doors to the industry by creating a regulatory body dedicated to crypto that has created “much needed clarity”, argues Alex Chehade, the local boss of Binance, the world’s largest crypto exchange. Binance and other exchanges such as Crypto.com and Bybit set up shop in Dubai in 2022. Big questions still hang over the industry. At one meeting in Dubai this correspondent met an indignant response when he asked if crypto would ever find its “killer app”. “We already have it,” snapped a developer.

Attitudes to crypto have polarised. To some, its promise of revolutionising finance has been shattered. It was meant to sidestep a stodgy rent-seeking financial system that was expensive, inaccessible to many and possibly untrustworthy. Yet the financial system is not static: it is actively adopting new technology. And regulators are belatedly acting. Singapore, once a leading crypto hub, asked Binance to pause operations as of December 2022. It had issued just ten licences out of some 600 recent applications to set up crypto businesses. As many as 25 out of 45 countries looked at by the Atlantic Council, a think tank, have imposed partial or complete bans on crypto.