The crypto market has had a challenging two years.
In 2022, the value of several major cryptocurrencies plummeted. Then, in November, crypto trading company FTX went bankrupt, and its CEO, Sam Bankman-Fried, was extradited from the Bahamas to face criminal and civil charges in the U.S. To top everything off, three banks with strong ties to the market, Silvergate Bank, Signature Bank and Silicon Valley Bank, collapsed in early 2023.
In March 2023, FTX announced that it had identified $8.9 billion in missing customer funds. In addition to FTX losses, the FBI reported that Americans lost $2.57 billion in online crypto scams in 2022.
Poor business practices and widespread theft have paved the way for stricter government regulations within the crypto market.
As NMI CEO Vijay Sondhi said in a recent interview, “[Sam Bankman-Fried] showed us that when money is not regulated, terrible things happen. What we’ve seen with FTX is that there’s a need for regulation, and there needs to be oversight, with risk management reporting to boards, not to CEOs.”
Despite its instability, Grand View Research estimates that the global cryptocurrency market will continue to grow at 12.5% (CAGR) from 2023 to 2030.
With everything happening in the market, consumer sentiment is mixed. For instance, financial technology firm Paxos surveyed 5,000 consumers in January 2023 and found that 75% of respondents were confident about crypto’s future. On the other hand, a March survey from Pew Research Center suggests the opposite; 75% of respondents said they are not confident in the reliability or safety of crypto investments.
Stricter regulations, faltering valuations and lukewarm consumer sentiments have put a halt on many companies’ plans to offer crypto payment acceptance at the point of sale.
Larger organizations like Mastercard and Visa support crypto-linked payment cards and are considering the viability of stablecoins (cryptocurrencies that are backed by fiat currencies or other stable assets). However, many other payments businesses have suspended their plans to offer crypto acceptance services.
As Sondhi points out, “It’s really not practical. It’s kind of a fool’s errand to bring crypto to the point of sale.”
To learn more about crypto’s “lingering winter” and its viability at the point of sale, read Sondhi’s full interview with the Green Sheet here: http://www.greensheet.com/emagazine.php?story_id=7235
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