(Kitco News) - The collapse of several prominent cryptocurrency exchanges, combined with the struggles the industry has faced as a whole over the past year, has led some to conclude that interest in crypto has diminished. But behind the scenes, the opposite is true as companies that offer related services continue to see an uptick in requests for assistance.
That was the main takeaway from Kitco Crypto’s conversation with David Schwed, chief operating officer for blockchain cybersecurity provider Halborn, who indicated that the firm has received requests from numerous clients “that are beginning their crypto journey” but have yet to go public.
“The sentiment is overall a positive one and many companies are taking advantage of the bear market by building,” Schwed said.
The COO, who previously served as the global head of digital assets technology for BNY Mellon and also held senior-level positions for Merrill Lynch, Salomon Smith Barney, Citigroup, and Galaxy Digital, suggested that more high-level executives will be making the transition to Web3 in the near future as the sector “is the future and has the ability to disrupt so many industries.”
“For me, the decision was centered on having the ability to help secure the future of this transformative technology,” he added.
When it comes to the areas of the crypto ecosystem that are proving to be the most attractive to executives in traditional finance (TradFi), Schwed pointed to the transparency offered in decentralized finance (DeFi) as being “incredibly intriguing for TradFi as well as the ability for projects to create new financial products and instruments in the DeFi ecosystem.” He also noted that “The success of DeFi still has a direct net positive impact on TradFi since there is still currently a need to on/off board crypto to Fiat.”
The increased involvement of TradFi with DeFi is a positive step, Schwed said, as it will increase the need for more secure projects and help infuse more capital into the markets. The industry experience that TradFi executives bring will help with the development of DeFi projects, he added.
Issues related to security, and the fact that blockchain is still a nascent technology in many respects, are the biggest areas of concern for TradFi companies looking to get involved in the crypto space. The cybersecurity expert said these issues are “further compounded by a lack of skilled talent, immutability of the transactions, and nation-state actors.”
Evidence that the government is slowly opening access to the crypto ecosystem in a controlled manner was demonstrated by the approval for BNY Mellon to begin offering crypto custody to their clients, which Schwed said was a positive sign for the future viability of digital assets. “The mere fact that the largest and oldest custodial bank is now custodying digital assets is a signal that crypto is here to stay,” he added.
When asked if he thought that all major banks would eventually offer crypto custody, the COO replied “Absolutely!”, and noted that the majority of major banks that he has spoken to are working on custody-related initiatives or exploring other major banks as sub-custodians.
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| Interest in crypto remains high despite suspected government crackdown on crypto banking |
And venturing slightly off-topic, when asked about any interesting use cases that Schwed has come across that haven’t really been mentioned or covered much in the press, he noted ongoing discussions by airlines who are throwing around the idea of issuing tickets as NFTs, which would allow for a secondary market for tickets.
“This would benefit everyone since passengers can sell their tickets if they can’t make their flight and by using smart contracts, the airlines can receive a portion of the sale,” he said.
For now, it remains to be seen if the government will adopt a more open stance towards crypto or continue to crack down on the industry as it has since the collapse of FTX. If Thursday’s announcement by the SEC that staking services offered by the cryptocurrency exchange Kraken amount to offering unregistered securities are any indication, it would seem that the government is going with the stick rather than the carrot.
