As has been going on since early May, layoffs abound in the crypto world. In 2022, the crypto industry will lose more than 26,000 of his jobs. As of this writing, the 2023 tally shows him no lower than 1,900.
It’s hard to predict when the layoff trend will subside, but one exchange is stopping it: Binance. After hiring 5,000 employees last year, CEO Changpeng Zhao announced at the Crypto Finance Conference in Switzerland on January 11 that he would increase Binance’s workforce by 30%, up from 15% this year. said he wanted.
“We will continue to build and hopefully rise again before the next bull market,” he said.
It may be for a while. According to Forbes, the average crypto winter lasts him four years. And that’s no small amount of time, considering the mysterious Bitcoin inventor Satoshi Nakamoto released it 14 years before him. The last crypto winter lasted for his three years from late 2017 to late 2020, and by November 2021, the coin’s price skyrocketed to historic highs.
In traditional securities, a bear market occurs when the market index falls by 20%. While there is no official definition of winter for analog cryptocurrencies in the industry, 2022 was a frigid year. In May, one of the most famous stablecoins detached from the US dollar, causing market turmoil. Throughout the year many of the most famous exchanges went bankrupt including Celsius, Voyager Digital, FTX and BlockFi. Bitcoin’s price has fallen by 77%, at least temporarily.
However, in recent weeks, Bitcoin has recovered slightly. As of January 25, he is above $23,000 for the first time since August.
Bradley Duke, co-CEO of ETC Group, said this month that Bitcoin’s rise was largely “driven by several macro concerns, such as falling inflation data and strong job growth in the United States. “It was tempered by positive economic data from
In fact, the consumer price index has recorded its biggest drop since the early COVID era. But bank CEOs are sticking to forecasts of a recession beyond the fall. Bank of America Chief Executive Brian Moynihan told investors on Jan. 13 that he was bracing for a “moderate recession” as the bank implemented a partial hiring freeze. said.
Meanwhile, Goldman Sachs has bitcoin Best Performing Assets of 2023 On January 23rd, the total return was 27% and the risk-adjusted ratio was 3:1. In December, it was revealed that the bank was planning to spend tens of millions of dollars buying and investing in cryptocurrency companies. FTX.
Matthew McDermott The head of digital assets at Goldman Sachs told Reuters that the collapse “has increased the need for more credible regulation.” Cryptocurrency It shows that players, and big banks, see an opportunity to get their business off the ground. ”
CEO David Solomon echoed his sentiments toward at least the technology driving cryptocurrencies in a December Wall Street Journal op-ed. The benefits of having regulated financial institutions develop blockchain applications are:Accustomed to high standards of regulatory oversight … [and] We can work with regulators and policy makers to find the right balance between regulation and innovation. ”
downfall of FTX And subsequent contagion “should not distract us from the opportunity at hand,” Solomon writes. “Investors large and small stand to benefit from blockchain innovation guided by established and experienced institutions.”
Any other support?
Will Solomon’s support be enough to keep other banks interested in cryptocurrencies despite last year’s challenges? JPMorgan Chase CEO Jamie Dimon didn’t sell. But again, he never was. (However, he does have a crypto wallet trademark.)
Metropolitan Community Bank announced its exit from the cryptocurrency industry earlier this month. Also, the crypto-friendly signatory bank is looking to offload $10 billion of digital assets from $8 billion, significantly shrinking its crypto portfolio.
Deputy Currency Commissioner Michael Hsu told Bloomberg in December that curiosity about cryptocurrencies for most banks had “disappeared” in 2022, when the value of the token plummeted, suggesting banks are now in the asset class. He said he would be “surprised” when he started showing interest in .
However, BNY Mellon CEO Robin Vince said in this month’s earnings call that digital assets have been and will continue to be the focus of the bank since it launched its crypto custody service in October. .
In a December Financial Times op-ed, Vince emphasized the importance of developing a regulatory framework for digital assets such as cryptocurrencies, stating that “much of the infrastructure already exists and extends beyond the regulation of traditional assets. I can,” he said.
“Digital asset innovation should be embraced and aligned with established rules and measured regulatory principles to protect customers and foster resilience,” Vince wrote. “In doing so, we also protect our most valuable asset: trust in the financial system.”
Crypto regulation was a hot topic before FTX’s demise. Sam Bankman-Fried, founder of the now-bankrupt exchange, testified before Congress in 2021 and later tweeted that he was “thrilled” about the mandate to be involved in refining the regulatory environment. . Regulation-building legislation related to him will almost certainly not hold up at this point, but now lawmakers and consumers want crypto regulation more than ever.
Regulators have recently provided a lot of guidance without being strict and fast. In December, the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation jointly issued a warning about the risks associated with banks and cryptocurrencies. Around the same time, the Basel Committee on Banking Supervision issued guidelines for banks operating in the digital assets space. The New York Financial Services Authority also said in December that banks it supervises must seek prior approval before engaging in crypto-related activities, and banks already involved must contact regulators immediately. announced.
NYDFS Superintendent Adrienne Harris said the new guidance would “protect consumers’ hard-earned money, help New York’s regulated banking organization stay resilient and competitive, and help those who want to submit cryptocurrency proposals. It’s important to ensure that expectations are clear.” activities related to. ”
However, regulators continue to disagree over who should be in control of cryptocurrencies, perhaps contributing to the delay. Last week, Securities and Exchange Commission Commissioner Hester Peirce said the SEC should regulate digital assets like crypto through rulemaking.
According to Pensions & Pensions, she said at a conference at Duke University on January 20 that “if we continue with our enforcement-by-enforcement regulatory approach at our current pace, it will take nearly 400 years to pass tokens that are purported to be securities.” It will take,” he said. investment. “In contrast, SEC rules have universal, though not retroactive, scope as soon as they become effective.”
Also at Duke University, Christine Johnson, commissioner of the Commodity Futures Trading Commission, told Congress that companies, including cryptocurrency companies, wishing to make CFTC-regulated acquisitions should not be subject to effective due diligence. requested that the new law include a statutory power to enforce entity.
Whatever else happens in 2023, the impact of last year will be addressed bit by bit. Bankruptcy hearings in the FTX case are scheduled until April. Claims against Celsius, which has just received court approval and a court date is scheduled to allow withdrawals for some customers, must be filed by February 9.
New York Attorney General Letitia James’ fraud case against former Celsius CEO Alex Mashinsky will be settled.
And in October, barring a plea bargain, Bankman-Fried will face trial in federal court on charges including wire fraud and conspiracy to launder money. Former FTX executives Caroline Ellison, Gary Wang, and Nishad Singh are all cooperating with authorities in their lawsuit against Bankman Freed. Bankman-Fried pleaded not guilty to eight counts.