Illustration: Aïda Amer/Axios
In ways various and sundry, blockchain technology is quietly thriving, even as regulators everywhere tighten their grip on the Wild West of cryptocurrencies.
Why it matters: In the wake of FTX’s collapse and a gradual rebound from the crypto winter’s darkest days, the formerly freewheeling market is in transition as regulators grapple with how to protect investors.
- Canada is singling out cryptocurrency exchanges, while the Securities and Exchanges Commission is cracking down on..well, just about everything related to digital currencies.
- Yet blockchain, the tech that underpins crypto assets, continues to carve out a niche as a digital ledger in numerous applications.
According to some experts, the flourishing sector is a symbol of how the public is slowly disentangling the blockchain from crypto.
- The former is evolving into a powerhouse of its own, even as the latter “skews toward pessimism,” Mrinal Manohar, CEO and co-founder of Casper Labs, tells Axios in an interview.
What they're saying: “It’s a technology that adds a ton of security and is tamper proof,” Manohar said, pointing to a growing list of governments relying on blockchain, even as they crack down on crypto trading.
- “It’s interesting because while many of these governments are figuring out their stance on cryptocurrencies, they’re pushing ahead with blockchain.”
Zoom out: Countries like India, Saudi Arabia and Colombia are tinkering with blockchain applications, while California made it the cornerstone of recent efforts to revamp the state’s Department of Motor Vehicles.
- Blockchain has also gained a toehold in the increasingly lucrative gaming industry.
Yes, but: Some fear heavy-handed enforcement in the wake of FTX’s implosion and the subsequent shakeout in crypto could have a retrograde impact on blockchain’s development.
This week, the Chamber of Digital Commerce called on Washington to adopt a comprehensive framework for digital assets.
- “Our allies’ and adversaries’ advances in blockchain and digital assets threaten U.S. leadership and dominance across next-generation finance, trade, business, and other verticals while the U.S. sits idle–effectively pushing the industry overseas,” the organization wrote in a letter.
Crypto is just beginning to emerge from a phase Manohar jokingly describes as the vice-filled “porn and gambling” era that defined the early internet. Conflating crypto’s negatives with the technology that underpins it is a risk to the blockchain’s development, he argues, especially in an already weak environment for fundraising.
- “If you thought ‘let’s get rid of the technology because I don’t like porn and gambling,’ we wouldn’t have e-commerce,” Manohar tells Axios.
The bottom line: “Regulators shouldn’t throw the baby out with the bathwater,” Manohar said.
- “I hope regulators don’t take away the potential of what’s a very powerful technology because of bad actors in crypto…The technology has so much promise that if regulators work with it well,” its potential is close to limitless, he added.