Cryptocurrency Crash Was Good for Industry, Weeded Out ‘Tourists’

The difficult economic climate has weeded out crypto industry “tourists,” leaving behind a stronger set of companies.

Crypto crash has weeded out some of the crypo industry “tourists." (REUTERS)

This year's difficult economic climate has weeded out some of the crypto industry “tourists,” leaving behind a stronger set of companies, said Irina Haivas, a partner at venture capital firm Atomico.

“It's not bad that the hype has gone,” she said, speaking at the Bloomberg Technology Summit in London on Wednesday, as it means the people building crypto companies are aware of the market conditions and “want to build something more sustainable rather than speculate around it.”

Edward Cooper, head of crypto at fintech startup Revolut Ltd., agreed. He said that 2020 was very frothy and euphoric with lots of crypto companies emerging without a viable business model.

“Then the tide goes out and the ones with good business models survive and they become stronger,” he said.

Cooper added that trading volume in crypto assets among Revolut's customers has fallen, but the number of customers signing up is much higher than in early 2020, which he credited to people recognizing that cryptocurrencies are becoming a “mainstream asset.”

Regulation of crypto assets has been helpful to Revolut's business since it makes traditional businesses feel more comfortable about partnering with them, Cooper said.

Revolut received full FCA registration for its UK crypto operations earlier this week, Bloomberg reported.