Crypto crash? It’s ‘Just A Blow’, says BTCS boss Charles Allen

The crypto winter is upon us, hammering institutional and retail investors alike.

In a July 21 Barron’s Live webinar, Financial news sat down with Charles Allen, CEO of blockchain infrastructure firm BTCS, to discuss the lasting impact of the crash, the role of regulators and the digital asset’s aftermath.

This excerpt has been edited for clarity and precision.


What do you think about the crypto crash?

It’s not just the crypto market. The whole economy is generally shaken. The background to other problems is huge.

When you look at crypto, it all started with the terra and stablecoin algorithmic crashes. This triggered certain events. The bright side is that we have seen an increase in crypto prices over the past few 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 step back and look back at the past eight to ten years. See where crypto was then and where it is now; it’s just a blip.

Regulators are starting to take a closer look at the crypto market. How do you think it will turn out?

This is a really positive thing for the industry. I got into crypto in 2013. It was very different back then. Goldman Sachs didn’t see crypto and institutions didn’t.

When companies first started using crypto or operating like a bank, or the initial coin offering craze in 2017, those things were actually securities for the most part. The regulators stayed away.

It is really important to have a good policy. If it’s securities, you want capital formation and orderly markets. Investor protection trumps capital formation.

In this case, we don’t want to hamper the technology; we want blockchain technologies to truly grow, thrive and be the cornerstone of economic growth. To do this, sensible regulation makes perfect sense. We have to take out the bad actors.

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Let’s hope the regulators are right. Maybe it’s a bit of a knee-jerk reaction. It always tends to go that way and then a setback, but I think that’s positive.

It cannot simply be left to the supervisory authorities to fix everything. What must the industry itself do to restore confidence 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’re trading with. They will probably start trying to keep their own private keys – if you’ve heard that phrase: “not your keys, not your money”.

With crypto, you don’t necessarily need protection from 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 where I have my money? What are they doing? How do they give me this feedback?

I think hopefully people are starting to wise up a little bit.

But on the other hand, people have very short memories. If crypto starts to rise again, people will to some extent forget why some of these things happened. Hopefully, they will take the lessons learned and start managing and monitoring their own money more productively.

Do you think they will have scars from the accident? Will people be crypto disabled?

It depends on the individual. If someone has lost a lot of money, it becomes hard to swallow. One of the things that I find really interesting when you look at 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 invested fully on the top and not on the bottom. It happened in the stock market, it happens in the crypto market. It is a very peculiar human behavior where you trade for the rest of your life, but it usually does not happen when you are trying to get the best trade in the stock market, unless you are a professional investor.

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

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If you are a stranger new to this field, it is a really interesting time to see how robust the technology is.

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

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

Institutions also operate on a risk-based and risk-free approach. Crypto trades almost like a technology stock. In 2014 it wasn’t really mainstream at first and it did its own thing. It has now become its own asset class, which I think is a positive thing.

The more institutionalized it becomes, the more it will eliminate market volatility. As investors become more sophisticated, it just becomes more common over time.

Many central banks are considering developing a central bank digital currency, effectively a central bank-backed stablecoin. What are your thoughts on these efforts?

Hopefully we will 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 was built piecemeal on itself; you have Swift and all these technologies and financial solutions when we can just redo the tracks. If the governments did it again I think it would be great.

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

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

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