Last year was a difficult one for the crypto industry. Even those of us who fundamentally believe in the future of cryptocurrencies and the technology around them would be foolish to think otherwise.

Soaring inflation, sharp interest rate hikes and a cost of living crunch combined to rock the sector in the first half of the year and sent investors scrambling for steadier ground, sparking a string of high profile bankruptcies across the industry. And that was all when Sam Bankman-Fried was still regarded as a shining white knight riding to the rescue of his troubled counterparts.

But it would be similarly foolish to survey the turbulence of the past twelve months in isolation. Volatility may shake valuations and reveal flaws that ultimately bring down individual firms and currencies, but the sector has grown into so much more than the sum of its parts.

The crypto industry is sitting on the cusp of its next stage of evolution. The potential of tokenisation and decentralised finance (DeFi) have just begun to be realised, and regulators globally are preparing to deliver sweeping industry-defining overhauls that will allow economies and companies to realise the full utility of crypto and the technology underpinning it.

We at Streets Consulting are more excited than ever about the future for the sector, as we continue to work with some of the most exciting innovators in the industry to navigate the change ahead.

Regulatory overhaul
Formed in 2008, Streets Consulting saw first hand the existential crisis that rocked the financial industry and the necessary regulatory change that took place in its wake. 

It was a crisis that gave us the agile regulatory system we have today; it spawned the fintech revolution and gave us the beginnings of crypto when the pseudonymous Satoshi Nakomoto released the whitepaper for what became Bitcoin.

A similar revolution is now sweeping into  the world of crypto – one that will cause the market to take stock, grow and mature. Contrary to what the more negative voices might have you believe, much of the crypto industry is crying out for firmer rules to raise standards and flush out the bad actors that threaten both consumers, investors and the future of the wider industry.

At Streets Consulting we have been proud to play a part in vocally championing that change in the UK through our work with CryptoUK, the self-regulatory trade association for the UK cryptoasset industry. We have supported their tireless drive to push policymakers for greater yet fairer regulation and consumer protection. And it’s great to see that smart amendments to the landmark Financial Services and Markets Bill passing through parliament will shift greater powers into the hands of lawmakers and financial watchdogs to deliver the regulation the sector needs to thrive. We are now well on our way to a regulatory system fit for the trailblazing firms that operate on these shores.

But our scope as an agency has always reached beyond the UK, and it’s exciting to see the EU already leading the way globally in the development of a truly industry-spanning regulatory framework in Markets in cryptoassets (MiCA). 

This legislation is set to both shield consumers and investors from the volatility and bad actors that we have seen inflict so much damage, as well as giving firms the certainty they need to build and innovate. Regulators around the world now have a framework on which to base their own reforms in a major step towards a safer future for crypto.

As ever, change will require firms to adapt.

Time to build
It’s during bear markets that the important and real use cases rise to the surface.

That is why it is important to help our clients separate the speculative side of the crypto industry from the businesses which will deliver immense value to consumers and companies in the years ahead.

We have thrown our support behind firms at the forefront of DeFi, for example, because we firmly believe that firms developing this technology are set to change the future of financial services.

Beneath the more attention grabbing headlines in the crypto market in 2022, DeFi hit some major milestones. The Lightning Network – a decentralised network allowing instant bitcoin payments – has evolved rapidly, for example, and looks set to revolutionise the way that people can send and receive bitcoin payments.

Tokenisation, too, is beginning to yield groundbreaking real-life results. At COP 27, carbon credits were top of mind with the announcement of a Vietnamese wind farm, financed through carbon credits issued on the blockchain. The application of the technology to the net zero transition is one of the areas that excites us most in the years ahead.

The new world into which we emerge after the current crisis will be one that places these technologies – not speculative investment and bad actors – at its heart. 

Navigating change
There will undoubtedly be more turbulence to come. But what motivates us now and has done for the past 15 years is helping companies traverse that and emerge stronger.

We have seen the financial services industry transform as it embraced the technological revolution of the past 15 years. And we’ll continue to work alongside some of the most innovative firms in the years ahead, helping them bring new technologies to market, influence change and shape the debate as global efforts emerge to regulate the crypto industry.