Crypto crash? It’s “just a blip”, says BTCS CEO Charles Allen

Crypto crash?  It’s “just a blip”, says BTCS CEO Charles Allen
Crypto crash?  It’s “just a blip”, says BTCS CEO Charles Allen

The crypto winter is upon us, hammering both institutional and private investors.

In a Barron’s Live webinar on July 21, Financial news spoke with Charles Allen, CEO of blockchain infrastructure firm BTCS, to discuss the lasting effects of the crash, the role of regulators and what’s next for digital assets.

This excerpt has been edited for clarity and brevity.

What do you think about crypto crash?

It’s not just the crypto market. The whole economy is generally shaky. The backdrop for other matters is large.

When you look at crypto, it all started with terra and the algorithmic stablecoin crash. It set in motion certain events. The positive is that we have seen an increase in crypto prices in the last couple of days. It really creates opportunities if you understand and are willing to take the time to learn the technology and what it can do.

The biggest thing you can do is take a step back and look over the last eight to ten years. See where crypto was then and where it is now; this is just a blip.

Regulators are starting to cast a more watchful eye over the crypto market. How do you think it will play out?

It is very positive for the industry. I started crypto back in 2013. It was very different then. Goldman Sachs didn’t look at crypto and institutions didn’t look at it.

When companies start using crypto or operating like a bank, or in the initial coin offering craze of 2017, these things were mostly securities. The regulators have been sitting on the sidelines.

It is very important to have a good policy. If it is securities, you want the formation of capital and orderly markets. Protection of investors trumps the formation of capital.

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In this case, we don’t want to hinder technology; we want blockchain technologies to truly grow, thrive and be a cornerstone of economic growth. To achieve that, sensible regulation is very sensible. You have to get the bad actors out.

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Hopefully the regulators get it right. It can be a bit of a knee jerk. It tends to always happen that way, and then a pullback, but I think that’s a positive.

It cannot just be left to regulators to set everything right. What must the industry itself do to restore trust in digital assets?

One thing you’re likely to see is that many retail investors and people holding crypto are starting to take a little more serious view of who they do business with. They will probably start trying to keep their own private keys – if you’ve heard that phrase: “not your keys, not your money”.

You don’t necessarily need the crypto protection of the Federal Deposit Insurance Corporation. Just take your money and secure it yourself. If you have your own money, you don’t have to worry about a bank failure. What is this institution I have my money with? What did? How do they give me these returns?

I think people are hopefully starting to get a little smarter.

But on the flip side, people have very short memories. If crypto starts to go up again, people will to some extent forget why some of these things happened. Hopefully, they will take the lesson and start managing and keeping track of their own money in a more productive way.

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Do you think they will be scarred from the crash? Will people be turned off by crypto?

It depends on the individual. If someone lost a lot of money, it will be hard to swallow. One of the things that I find very interesting, when you look at either the stock market or even the crypto market, is that there is a huge fear of missing out.

People tend to always buy at the top. They have fully invested in the top and not the bottom. It has happened in the stock market, it is happening in the crypto market. It’s a very peculiar human behavior, where everything else in life you negotiate, but it doesn’t tend to happen that much when you’re trying to get the best deal in the stock market unless you’re a professional investor.

Hopefully the trust is not lost. The interesting thing is that blockchains really haven’t failed. Bitcoin’s blockchain has never been hacked, Ethereum is holding strong. Most of these blockchains have never had any problems. If you look at Celsius, it paid back its de-fi loans before it filed for bankruptcy.

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If you’re an outsider learning about this space, it’s a very interesting time to see how robust the technology is.

Before the crash, there was a big push to legitimize crypto with the inclusion of institutional investors. What impact have they had, and what impact will they have, if and when crypto recovers?

It’s actually very impactful that institutions have gotten into crypto. It changes the dynamic a little bit – the dollar is floating, the supply of money has gone up, that’s driven the price up.

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Institutions also operate according to a risk-on-risk-of approach. Crypto trades almost like a technology stock. In 2014, in the early days, it wasn’t really mainstream and it did its own thing. It has now become a separate asset class, which I think is positive.

The more institutionalized it becomes, it will take the volatility out of the market. As investors become more sophisticated, it only makes it more mainstream over time.

Many central banks are looking at developing a digital central bank currency, effectively a stable coin backed by the central bank. What do you think of this effort?

I hope we see central bank digital currencies. That would be huge. The way we move money, at least in the US, is very efficient, but if you look at the pipes, it’s not a very good system. It is built piecemeal on top of itself; you have Swift and all these financial technologies and solutions when we can just redo the tracks. If governments do that again, I think that would be fantastic.

You can listen to our full interview with Charles here, on Apple, or on Spotify

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To contact the author of this story with feedback or news, email Jeremy Chan

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