The United States Has Crypto in a Chokehold; Yet Innovation Has Redirected and is Flourishing in Dubai – What’s Next for the Industry? A Q&A with Sunil Chauhan
Rally Point’s Elise Perkins chatted with serial entrepreneur Sunil Chauhan, Founder of Twister Digital l Co-Founder of Evolve, to get his take on what lies ahead for the crypto industry amind continued fallout from crypto behemoths and stagnant regulation.
EP: You’ve counselled crypto and Web3 companies all over the world – what’s the sentiment like right now in Europe? In Dubai?
SC: Let’s look at this from a crypto and web3 perspective. Firstly, the feeling is that Europe and Dubai are bullish on crypto and web3. In the UK for example, retail investment into digital assets like cryptocurrency doesn’t feel like it is ready to come to the fore at the moment given the sentiment from the last cycle and our current ‘crypto winter’. Negative sentiment comes from malpractices and retail funds being misused. Unfortunately, 2022 was one of our worst for these practices so the trust digital assets once gained feels like it has been lost with individual participants.
In comparison, institutional investment is gaining traction. Blockchain technologies are inevitably going to form a big part of the future of financial markets.
Existing financial services organizations are seeking ways to increase portfolios and split risk. Digital assets like cryptocurrency and investments into web3 projects give them an additional asset class to add to the portfolio. With recent examples of this occurring across Asia and Europe like global investment company and asset manager, abrdn has invested in the UK’s first regulated digital securities exchange Archax; the step into digital assets has already begun.
Institutional investment is likely to be the leader in galvanizing the industry and setting up the next wave of demand for digital assets. Furthermore, with new rules on markets in crypto-assets (MiCA) on the horizon and being implemented, as well as regulations becoming black and white rather than a grey area in developed EU countries, the opportunity for companies in Europe will only increase.
All organizations need frameworks to form an infrastructure work within otherwise the likelihood of malpractice is higher. Digital Assets are the biggest innovation in our lifetime for disrupting the financial markets so frameworks help to build the guidance for firms and participants looking to enter into the space.
Dubai is the most thriving city for building and developing digital assets and web3. With a government who is backing crypto firms through deep regulation whilst looking to entice more individuals and companies to the area, it makes sense to set up a firm in Dubai and the surrounding areas.
Dubai has been a leader in web3 technology, products and innovation for a number of years. The world is now playing catch up to the city’s innovation and drive to become a tech innovation hub.
EP: Many crypto startups continue to run lean. How have the most innovative teams spent the time wisely over the past year?
SC: Business practice 101 is to run lean for as long as possible so that your growth is sustainable. We have seen a lot of firms in digital assets and web3 grow quickly and then plug the gaps using people. If they do not have the optimum amount of capital to continue the business journey or have been unable to find the right investors, the probability of retaining talent reduces.
Those that are surviving this bearish market are retaining top talent, running lean where they can and are focused on building the most innovative and long-lasting products that can be used amongst novices and experts in the industry. This is the right practice for firms who know when the market conditions become favorable, the product will stand up with the aim to form part of the existing financial ecosystem.
EP: How do crypto leaders outside the United States view what’s happening here? Are they moving strategically away from investing money in events, people and other resources here? Doubling down?
SC: The USA is looking like the land of the unknown. The feeling is people don’t know whether to stick or twist with these latest sanctions. The fallout from the LUNA crisis and FTX were always going to be long-lasting. However, the sanctions feel premature whilst the cases above have yet to be dealt with by USA authorities.
The sanction of Binance felt like it had been coming for a while although allowing Binance to set up in the USA is questionable considering the regulatory scrutiny they have been under.
Coinbase is a particularly interesting case considering they have been a leading light for regulation in the USA. As a listed company, this surely doesn’t benefit Coinbase, its shareholders and its prospective turnover in the next six months – to – one year.
We don’t know if the new sanctions have a bigger motive or if they are aimed at each company’s practices. What I can say is firms with big dreams, drive and intentions to form part of the existing financial ecosystem are being stifled from growing at this time in the US.
EP: What do you think the next six months will bring? A year from now, what are you most hopeful about?
SC: Regulation and clarity across the world will continue to grow as adoption and visibility of digital assets, web3, blockchain and new technologies such as AI, AR and VR continue to increase.
Additionally, clarification on the USA’s position is important for the global position of digital assets. Whilst Asia and the Middle East show promise for the growth of digital assets, the world’s biggest trade market remains the USA so clarification on its position for both institutions and residents is vital.
The hope for the future is for blockchain not to be considered an additional technology to maintain but for it to be looked upon as a technology source that can grow existing financial services and produce robust products that enhance the financial experience for individual participants and institutions alike.