TECHNOLOGY
“ The explosive growth of cryptocurrencies has led to nations urging their financial regulators to introduce frameworks for digital assets , but approaches have varied significantly ”
BEN REEVE PARTNER , OLIVER WYMAN
have little or no understanding of what they ’ re investing in .
Ben Reeve , a partner in Oliver Wyman ’ s Global Financial Services practice , says : “ Emerging cryptocurrencies enhance the risk of information asymmetries across the ecosystem , which is driven by opaque and concentrated ownership structures , varying scope and quality of investor materials , and complex multi-platform market structures . Uninformed investors may lock capital into protocols that observe complex yet flawed mechanics for vesting , lockups , and overall security .
“ Crypto illiteracy poses a challenge for on-chain growth as investors have become wary of more advanced functionalities such as staking , which is indicative of the depletion from DeFi totally value locked , falling from US $ 173bn to US $ 60bn since January .”
Does crypto have a future amid economic slowdown ? With global macroeconomic challenges , further questions will be asked about crypto ’ s future – particularly new and emerging tokens . After a slump in the crypto market , inflation has hit double figures in some countries , while economic growth in advanced economies like the US and the Eurozone is projected to slow to just 1.4 % next year .
“ Many people are rightfully looking inward for ways to save money and alleviate pressures , finding little comfort in a volatile market ,” Dan Da Rosa says . “ Naturally , fewer people are finding a reason to trust emerging currencies that they may never have heard of or know what the outcome will be . It ’ s a challenge , as we want to do what we can to educate people on what investing in cryptocurrency could mean for their investments on a long-term basis . But , for some , it ’ s just not a priority right now .
“ On the flip side , for regular investors who have experience with volatile markets and the value of investing , they may be more inclined to choose a cryptocurrency that has an established overview of trends , dips and peaks to evaluate .”
68 November 2022