Saturday, March 2, 2024
Subscribe to Small Business Monthly
Small Business Monthly on Facebook Small Business Monthly on Twitter Small Business Monthly on LinkedIn

SBM Articles

 Search

Crypto's Demise Is Overstated

by Joseph R. Soraghan

Though not a national leader the St. Louis region has historically shown a comparatively healthy and viable level in crypto activity (currencies, blockchain development, digital strategies, development, and sales of digital products). In 2022, Missouri was the 17th ranking state for most crypto aspects. St. Louis was 31st among US. cities in terms of crypto owners per capita.

Crypto’s Present Damaged State

For the approximately 14 years of the existence of the crypto currencies and digital assets, that industry has globally been particularly mysterious and volatile. And, to summarize that history, suffice it to say that the recent bankruptcies in November 2022 of the FTX cryptocurrency exchange and BlockFi, preceded and followed by such volatility and smaller bankruptcies, have caused many to predict the imminent demise of crypto industries.

However, that volatility existed even before the string of bankruptcies occurring in late 2022. And notwithstanding that volatility, many experts believed that the cryptocurrencies and related industries, all of which are dependent on new technologies (mainly blockchain), were an unadulterated boon to the business world, constituting a particularly efficient system of trade and investment unfettered by regulation.

With crypto being relatively unregulated and using new and not-yet-understood methods of trading and transactions (e.g., blockchain and “smart” contracts), the then existing methods of regulation (e.g., anti-fraud, banking, insurance, commodities and securities law) were (probably mistakenly) not seen as applicable.

But over time, other experts, together with various executive government agencies, legislators and courts, began to recognize that this inability – or lack of desire – to apply existing regulation was endangering crypto users and investors with the same harms that pre-dated crypto, to wit: fraud, mistake, failure to disclose, etc.

2022: The Crypto Winter

The total crypto market capitalization globally in 2022 dropped from over $2.9 trillion in November 2021 to $198 billion at the end of 2022. Many experts argue that 2022 constituted a “crypto winter” of exceptional volatility and dropping prices.

Probable Recovery

But “crypto” will survive -- in all of the St. Louis region, the US and the advanced world.

First, the crypto technologies, particularly blockchain, are very useful – indeed maybe disruptively so – over and above their use for crypto. Further, the use of some crypto activities, such as non-fungible tokens (“NFTs”) and cloud storage space, etc., which may be less susceptible of fraud, will extend the life of crypto while it, and its regulation, mature around the world.

Midwest U.S. developer blockchain activity actually accelerated in 2022. The Bitbank crypto-exchange and other analysts predict that crypto prices will increase significantly after the first quarter of 2023. And many experts predict that employment nationally in the Fintech industry, including its crypto component, is looking forward to a productive 2023. (These predictions depend somewhat on the success of legislation and regulation yet to be adopted.)
And there is every reason to believe that the growth of crypto will apply to the St. Louis region and the Midwest United States.

Joseph R. Soraghan, business attorney and mediator with Danna McKitrick, P.C., practices in legal matters pertaining to business operations and growth. He guides businesses in financing, contracts, acquisitions, mergers, and sales. Joe frequently resolves commercial disputes as an arbitrator or mediator or through litigation. Joe can be reached at 314.889.7121 or jsoraghan@dmfirm.com.
 

Submitted 1 years 32 days ago
Tags:
Categories: categoryLegal Matters
Views: 541
Print