Crypto winter is beginning to thaw. Better market dynamics, progress towards regulatory clarity, and the approval of spot Bitcoin ETFs (a type of exchange-traded fund that gives investors exposure to BTC without having to hold the underlying asset) have all spurred renewed optimism in the space.
4 Guidelines for the Future of Crypto
- Zero in on how you can adapt and diversify your core offering to meet the needs of customers.
- Teach new and existing customers about the benefits of blockchain beyond speculation.
- Build the team you need rather than overhire and then have to deal with layoffs.
- Remember the future will be brighter.
Having been involved in the crypto space for over a decade now, including roles at CME Group, Kraken and now Bitstamp, I’ve learned some critical things about resilience and focus that I hope any industry leader can learn from.
Focus on Fundamentals
First, as we enter a new growth cycle, a steadfast focus on product excellence and compliance is key.
During bull markets, companies can often get caught up in the hype, forgetting about the fundamentals. Instead, zero in on how you can adapt and diversify your core offering to meet the needs of customers.
Committing to innovation isn’t just about keeping pace, it’s about setting new standards for service and evolving to meet the needs of the Web3 economy.
At the same time, taking a compliance-forward approach is table stakes at this point. Every company must operate with the right licenses and standards and clearly communicate this to their customers as well. Building trust with users is the most important thing that many of us can do to build credibility and longevity for the ecosystem.
The crypto industry’s success relies on its leaders dialing in on their core offering and communicating its commitment to operating above-board. Only with this focus can the industry avoid repeating its past mistakes.
Invest for the Long-Term
Another lesson we learned during the crypto winter is the importance of customer and community education.
Web3 is perhaps a unique industry in that the more people learn about it, the more they want to invest and get involved. This isn’t the case with Web 2.0. The more people learn about Google and Meta’s privacy policies, for example, the less they want to know.
Education is key to onboarding the next billion users to crypto. It’s also key to helping them make the right decisions about where to invest their money, how to protect their assets and the other uses of blockchain technology.
Part of this entails highlighting use cases beyond crypto speculation. From gaming to digital identity to onchain governance and staking, digital assets are just a starting point. It’s our job to start onboarding people to all of the possibilities that lie ahead.
Providing educational resources and engaging the crypto-native and crypto-curious community is one of the best ways we can build a sustainable, mainstream Web3 economy.
Hire with Care
An unfortunate yet all-too-common trend during the last bull cycle were the hiring frenzies followed by the inevitable mass layoffs.
VC-backed crypto firms, flush with cash, rushed to expand their headcount, ultimately making short-sighted hiring decisions. What goes up must come down, and the cost of dramatic cuts is high. Not only do layoffs disrupt company’s operations and morale, they disrupt people’s lives. The talent and passion people have for crypto is not something we can afford to lose.
The takeaway here is that even when times are good, focus on building a strong, resilient team. Invest in fostering a strong company culture built on shared purpose. Don’t scale in a way that’s unsustainable.
Focus on the Future
Despite the challenges and scandals over the past two years, I believe that the future of crypto is brighter than ever.
The downfall of FTX in late 2022 was a catalyst for other exchanges to reaffirm their commitment to compliance and properly managing customer assets. At Bitstamp, we communicated with our customers that their assets are always safely held 1-1 in custody, with industry-leading third-party custody providers.
In November 2023, Binance Founder and CEO Changpeng Zhao pleaded guilty to failing to maintain an effective anti-money laundering program. He now faces 18 months in prison and is expected to be sentenced in the spring.
The Department of Justice’s actions against Binance and Zhao helped establish a level playing field, ensuring all industry participants adhere to regulatory standards. This helps to create an environment for trusted platforms to contribute to a secure and reliable crypto ecosystem for all.
I remain hopeful for a robust regulatory framework in the United States that will prevent illegal activities by bad actors such as Binance and FTX, while fostering the growth of compliant crypto firms.
Those who remain committed to product excellence, compliance and investing in education and top-tier talent will be well-positioned to capture market share and influence in the months and years ahead.
Crypto has never really been about who has the flashiest marketing budget, the biggest celebrity endorsements or the most VC funding. It’s about building great products and services that evolve to meet the needs of the future of finance.
As we look ahead to the spring, let’s carry the lessons we learned during the crypto winter with us, and we’ll all come out stronger.
