The Consensus 2023 conference was a fruitful experience for those hungry to know more about emerging digital asset trends. Over 15,000 people from various industries attended the CoinDesk-hosted event in Austin, Texas. Well-known and admired companies, including PayPal, Pepsi, Franklin Templeton, and Mastercard, were on site to share stories about their blockchain-related projects.
Despite ongoing industry challenges, interest and engagement in digital assets and blockchain remain high. In Austin, the collapse of FTX and challenges surrounding crypto firms at large, while acknowledged, were not a focal point. We had great discussions about the underlying issues and the impact those events had on the entire digital asset space while still looking toward the future.
The programming at Consensus 2023 focused on the potential of digital assets, including greater financial inclusion, faster and cheaper transactions, and more secure and transparent systems for moving money globally.
To touch on our experience in more detail, the SRM team wanted to share these five key takeaways from the conference with our readers:
Slow regulatory action poses a risk. Congress desperately needs to provide guidance and clarity for the U.S. to remain competitive. The failure to establish a clear regulatory framework makes competing with other major economies increasingly difficult. Europe and much of Asia have rules in place, attracting significant investments and innovation. The U.S. is lagging and, absent swift action, risks losing its competitive edge, jobs, and potentially the dollar's global reserve status.
The pressure on – and from – the White House is growing. The executive branch is becoming increasingly hostile toward digital assets, ramping up enforcement actions and coordinating efforts to create distance between the industry and the banking sector. A recent survey found that 40% of U.S.-based crypto businesses struggled to gain access to banking services, and another 30% "preferred not to say." Recent bank failures further compounded the issue.
Regulatory bodies signal a potential turf war. The conference drew attention to discord between the Commodities Futures Trading Commission and the Securities and Exchange Commission. Each has differing views on regulating digital assets, hindering the establishment of clear regulatory guidelines and creating confusion for industry players. Some former regulators are calling for legislative solutions, while others believe that enforcement actions will continue to be the primary regulation method. Court intervention is also a possibility.
Responsible, compelling use cases can light the way. It has become increasingly clear that digital currency and blockchain use cases must be shared with legislators, regulators, and the public to help them understand the technology's applications. At least one protocol, Polygon, is gathering information for a public database of digital currency and blockchain use cases in hopes that doing so will help policymakers better understand the technology and develop appropriate regulations.
Digital identification (ID) systems are needed. This is becoming an integral component of digitizing money and ensuring regulatory compliance. The lack of a reliable digital ID system continues to pose significant obstacles to the mainstream adoption of digital assets. The industry is actively working to develop solutions to facilitate digital ID adoption.
The Bottom Line
Consensus 2023 was a significant event that underscored the digital asset industry's opportunities and challenges. A recurring theme was the need for a reliable ID system and clear regulatory guidelines. To achieve regulatory clarity, the industry must work closely with regulators and lawmakers, educating them about the technology's application and its benefits.
The U.S. must also establish a clear regulatory framework to remain competitive with other major economies. Without swift action, the U.S. risks falling behind in the race to shape the future of finance and commerce.
As always, SRM will continue to track emerging developments and update you as significant changes occur.