The future of cryptocurrencies will entail greater regulation, more involvement by large institutions, lower volatility and greater integration with traditional assets.
That’s according to panelists at the Bloomberg Crypto Summit held in London on Friday. The summit convened at the end of the bloodiest year yet for the nascent crypto market, in which more than US$700 billion has been lost, to assess the damage and look ahead to 2019.
While no one forecast an immediate rebound in crypto prices -- Bitcoin has lost about 80 per cent of its value this year -- they cast the current downturn as more like growing pains than rigor mortis. In fact two areas of growth for the industry will come from low-volatility tokens known as stable coins and so-called security tokens, digital contracts that represent ownership of assets such as real estate or stocks.
“I don’t regard this as an existential crisis, I just regard it as a bump in the road and institutional investors have had plenty of bumps in the road in conventional currencies and transaction systems,” James Bevan, chief investment officer at CCLA Investment Management, said on a panel.
One of the hottest crazes in the world of crypto this year, stable coins, still has plenty of room to run said Lewis Fellas, chief investment officer at crypto fund Bletchley Park Asset Management. While some estimates put the number of projects in development at as many as 120 we are only in the early innings of the proliferation, Fellas said.
“I think we’re just getting started,” Fellas said. “I can see a huge expansion.”
However the market develops, regulation will be a constant and growing feature of the digital assets world in 2019. That could be good news for entrepreneurs and business owners wanting governments to confer legitimacy on an industry rife with scams and manipulation.
It could also pose challenges if different jurisdictions adhere to lower standards than others, especially if that’s smaller countries that have been proactively promoting themselves as a destination for crypto businesses, said Ryan Radloff, chief executive officer of CoinShares.
Still, it’s a beneficial to get the wheels in motion for crypto regulations so the industry can learn from potential mistakes, said Marieke Flament, global chief marketing officer at Circle Internet Financial Ltd.
“It’s good to see some larger countries step through and show the route, but I would not discredit the work that others are doing, because if you have no one starting then everyone is waiting,” said Flament.