What the top crypto execs predict for the industry in 2022: Regulation and a Big Tech ‘brain drain’

Cryptocurrencies have had yet another wild year.

Bitcoin, the world’s largest digital asset, has seen a roughly 65% gain since January — with some ten to twenty percent swings in between. It brought in a crop of new, individual investors along the way as payment giants like PayPal started letting users trade crypto. More billionaires and institutional investors dove in to help legitimize the asset class.

The industry now sprawls well beyond bitcoin. NFTs, blockchain-based videogames and “Web3” are top of executives’ minds heading into next year. Regulation remains as the biggest uncertainty.

Here’s a look at what some of the industry’s most influential executives had to say.

The 29-year-old founder and CEO told CNBC he doesn’t expect legislative action to be the immediate answer for “regulatory clarity.” Especially since it’s “pretty hard right now to get things through Congress.”

It’s just as likely to be cobbled together from a series of statements, enforcement actions, and “other indications” to set the guardrails,” Bankman-Fried said.

The CEO is still bullish on Solana as an alternative to Ethereum. But it’s possible that a new blockchain pops up as the “Holy Grail” that would eventually be able to host a million transactions per second. Right now, he said there are “very few even trying to get that point.”

The CEO of Circle is calling for more use of dollar-pegged cryptocurrencies, or stablecoins, by e-commerce firms, consumers and financial institutions. Circle, which is set to go public via SPAC, operates its own stablecoin called USDC.

Allaire expects to see more institutional adoption and celebrity trendsetters lending their brands to crypto through NFTs. DAOs, which rely on crowdfunding, may even “challenge venture capital investors on some of the largest and hottest deals in crypto,” he said.

The biggest threat? “Incoherent and inconsistent, hastily formed regulations and policy,” Allaire said.

Brian Brooks, the former Acting Comptroller of the Currency, said there’s now consensus among lawmakers in Washington that crypto is here to stay. He expects more blockbuster funding rounds after a record 2021, continued mainstream understanding of the crypto space.

For example, not all “crypto” are currencies, or meant to act like currencies, he said.

Paxos is the company powering PayPal’s crypto offering behind the scenes. CEO Charles Cascarilla also expects more action in the stablecoin market. His company offers its own dollar-pegged coin, USDP. The CEO is one of many warning that the U.S. has a lot to lose if it gets regulation wrong.

This year marked an industry milestone of the first futures-based bitcoin ETF. But Grayscale and others in the industry are looking to take that a step further.

It’s looking to convert the world’s largest bitcoin trust, GBTC, into an ETF and CEO Michael Sonnenshein is optimistic for an approval in 2022. He’s also seeing investor interest beyond bitcoin, and “tension” between Big Tech and start-ups.

Robinhood started as a stock-trading start-up. But in its second quarter as a public company, it got more than half of total revenue from crypto trades. Of that, more than 60% came from Dogecoin transactions. As the asset class becomes more important to the company’s bottom line, executives have said they’re moving slowly on adding new assets to the platform, until there’s more regulatory clarity.

If you’ve ever perused crypto Twitter, you probably know “Pomp.” With more than 1 million followers, the investor is known for his bullish calls on bitcoin and said the asset has transitioned from a contrarian idea, to a “consensus idea on Wall Street in 2021.” He expects more adoption next year from legacy companies buying bitcoin for their balance sheets, and eventually building dedicated business units.

Pompliano also highlighted moves in the bitcoin mining industry after China made the activity illegal, bitcoin’s potential for global payments, and a “brain drain” underway from Big Tech and Wall Street.

While this was a busy year for the crypto trade association in DC, “2022 is going to be way busier,” Bond said. She also expects the SEC to come out with more enforcement actions.

The crypto exchange, founded by Tyler and Cameron Winklevoss, climbed to a $7 billion valuation this year and is among the dozens with a bitcoin ETF application in the works. Its COO, Noah Perlman, sees crypto payments going mainstream, more non-tech companies embracing the Metaverse, and more women jumping into a male-dominated market.

Ethereum has had a break-out year but new, alternative blockchains are popping up as platforms to build NFTs and other apps. Avalanche is among the new challengers to Ethereum. The president of Ava Labs, a former hedge fund trader, predicts a shake out of “speculative” assets, and a “brain drain” as software developers leave Big Tech in search of next wave of computing. He also expects bitcoin’s market dominance to keep declining.