No bosses. No 9-5 grind. No corporate bureaucracy. Limitless potential for growth. This is the lure of DAOs, or decentralized autonomous organizations, which many in the Web3 space view as the “future of work.”

At a DAO, instead of toiling away as a cog in the corporate wheel, you can unleash your inner entrepreneur and contribute as much or little as you’d like. You can work at one DAO or you can work at 10 DAOs. Maybe you choose to work 12-hour days for a month, save up some cash and then spend your summer kayaking the Sea of Cortez. You’re in full control.

This article is part of CoinDesk’s Future of Work Week.

Kind of.

It’s true that all of this sounds alluring, but it’s also true that it’s hopelessly opaque. How do you actually make money at a DAO? How do you cobble together work? What types of gigs are out there?

To bridge us from the abstract to the concrete, I spoke with a full-time DAO worker who goes by T Wells, a 30-something former educator who, in 2021, began hunting for “bounties” in the DAO ecosystem. Bounties are basically gig postings. If a DAO needs to create a logo, they might post a bounty and quickly find a talented designer.

T Wells became good at bounties. He enjoyed it. In his “real world” job in education tech and curriculum development, his skills ranged from writing to graphic design to producing videos. “To be an effective educator, you have to be a Swiss Army knife,” says T Wells. “It’s just the way it is. Educators are often underestimated.”

So he put those skills to work at the DAOs, first knocking out bounties for 1Hive, and later contributing to DAOs like ShapeShift and Gnosis. These bounties started to add up. He built relationships with the DAOs and they gave him more work. He pitched his own projects. The DAO-work went so well that he quit his job in education. Even now, after crypto prices tumbled, T Wells is bullish on his DAO work. “There’s just a lot of opportunity,” says T Wells, “And a lot of really enthusiastic people that are sincere about building a better future.”

This is how he did it.

Interview has been condensed and lightly edited for clarity.

How’d you first start making money at a DAO?

T Wells: I took my first bounty in early 2021. One of the nice things about this space is the ease of access. If you find a task that needs doing and you have the skill set that matches up with it and you have a set of basic pre-existing relationships with people in that DAO, it’s very easy to get started.

Walk us through the mechanics. How does it work?

Coming into the DAO of 1Hive, they have great community moderators and people who are going to welcome you and ask you questions. Maybe they help figure out where you might fit best.

So in my case, because I was working in education, I paired up with a couple of the communications folks. And there was some low-hanging fruit, like writing articles and doing banner design. It was an easy way to get involved and be a part of what’s happening. Plus I can get compensated in some crypto and develop a sense of ownership and belonging in the community.

Is that when you found the bounty list? What does it look like?

You’ll typically see a list of projects that has three columns: Not Started, In Progress and Finished. That’s the generic example.

With 1Hive, they pointed me to the bounty list and said, “Okay, so these are the ones we need to do. They’re not started yet. Is there anything you think you could tackle?” And then they asked for a few samples of work. And then it was sort of off to the races.

What was on that bounty list? Just a few examples?

They needed Medium articles to be written, banners, Twitter copy, videos to be made. One of the very first bounties I did was a very short tutorial video explaining the “Connext Bridge.” So it could be as simple as a tutorial video. [The Connext Bridge is a way of “transferring assets from Matic to xDai (now Gnosis) powered by Connext.” If that still sounds like gobblylook, you can watch T Well’s tutorial.]

What does bounty work pay? And how does it stack up to comparable work in the Web2 world?

When I first began, I was working full time elsewhere. So it was less about, “Oh, it’s a competitive rate,” and more about the interesting opportunity. And for most people I know who are working full time in the DAO space now, they had also had that phase where it was first a side hustle. But that means the rates are competitive, right? Or, ultimately, you wouldn’t be able to make that transition to full time if they weren’t.

Makes sense. What’s a concrete example?

So I think there was a short video under two minutes, and I think that paid around $350 or $400. And I was somewhat of an unknown quantity at the time, right?

Scaling it up, to give you another example, from a larger DAO, a sort of longer-form video would be closer to $1,500.

That’s real money.

For sure. And I mean, some DAOs are serious about trying to attract talent, and they know that it needs to be incentivized.

So you were doing a mix of videos, blog posts, banner designs. What would a banner design pay?

Yeah, it would be less than $100, right? It’s been a while since I’ve done those.

Got it. What was the next step for you? Did you just keep banging out more bounties?

On the video side, for example, I think once I had some success doing that, it became less about, “When’s the next video bounty?” and more about, if we need a video done, they would tend to default to people who had done the bounty successfully. There were more opportunities for me, and a direct line of work with the 1Hive DAO. I think that’s likely the case for all kinds of work, right?

Right. You start with bounties almost as a cold freelancer, and then you build relationships.

Exactly. The bounty is typically the place where a lot of people get their foot in the door and then develop deeper relationships and contributions with the organization.

So how did you contribute in a deeper way?

If you’re the kind of person who’s looking for new ways to contribute, and you’ve built a track record, then typically the door is open at certain DAOs for you to propose more things that you can do.

You pitched them a new scope of work? What happened in your case?

Yeah. This was [the fourth quarter] of last year. I was fortunate enough to have a good group of folks at 1Hive that I was working with, and they wanted to make a push for more content on YouTube, some live content.

So, we spun up essentially a sub-DAO. And I’ve been helping to run a sub-DAO on the communications side for 1Hive. This led to new opportunities to do more PM [project management].

How did that pitching process work? Is it like the Web3 version of Don Draper [of “Mad Men”] putting together a pitch deck? How’d you sell it?

[Laughs.] Well, the more you consider this stuff, the human element is never removed. The starting point has to be the relationships in the organization. You see it at 1Hive and elsewhere.

A proposal will show up on the Forum [the platform where proposals are voted on], and it was never really discussed in the Discord. Well, what happens to the post? Most likely, it doesn’t get a whole lot of attention.

You mean that if some “rando” just pitches something out of the blue and asks for a vote – without socializing the concept – it’s less likely to be green-lit?

The key point here is that the relationships within the DAO are the right starting point, and the best way to establish those relationships, I think, is doing great bounty work. That’s the place to start.

When was your inflection point? When did DAO work go from being a side hustle to your main source of income?

The moment I had the approval of the 1Hive community to move forward with the communications project as more of a PM was the point where I was, like, “Ok, now we have runway, and now we have the resources to make this possible.”

Backing up a bit: Overall, how would you say that DAO work compares to your old life where you had a full-time job?

The trade-offs really are the differences between freelancing and being employed. You have greater freedom but less predictability.

I certainly wouldn’t say it’s for everyone, but I think that for people who are already inclined to freelance work and have an entrepreneurial spirit and are willing to engage with people and are interested in learning new things there’s a lot of interesting opportunities, even on the non-technical side.

How about some other non-tech examples? You mentioned blog posts, banner ads and video. Any others?

Any type of communications work. People are looking for social media managers. They’re looking for folks who are keen on business development. Even the sort of internal communications side – ensuring there is smooth communication and clarity between the technical people and the non-technical people. I mean, DAOs need that connective tissue just like any other organization.

How does your overall compensation compare to your pre-DAO life?

Month to month it’s different because you’re not salaried. So that’s probably more akin to freelancing. But at the end of the day, I think the average is more or less the same.

How do you get paid? In tokens native to the DAO? Bitcoin? Fiat?

Well, the vast majority, if not all, of the bounty work that I did initially through 1Hive was all paid out in the token of the DAO. There are other cases where a DAO is able to pay in stablecoins. Those are typically bigger DAOs that have active treasury management and the like.

Obviously the crypto markets have been bloody. How has that impacted DAO work?

I’d be lying if I said nothing had changed. I think everybody is taking a close look at their resources and how they’re going to allocate them. And so it’s certainly a bit more challenging now. But I think people who spent time to build good relationships – and really work to provide genuine value – will make it. The serious people who are in this for the long haul are here now, and they’re not going anywhere.

How would you say this is different from your normal life?

I feel like I have more control over what I’m putting my time into. And that’s empowering. And the people I work with are a huge part of that; we’re all trying to build things together, rather than deferring to people above us in a hierarchy. So that’s a super-empowering feeling.

More from Future of Work Week

The Crypto Jobs Boom

It may be a bear market, but there are still plenty of jobs to be had at crypto companies.

‘We’re Freaking DAOing It’: The People Who Think DAOs Are the Future of Work

Meet the pioneers who work at decentralized autonomous organizations.

Chase Chapman on DAOs and Professional Polyamory

It may be a bear market, but there are still plenty of jobs to be had at crypto companies.

Payroll, Web3 and the $62B Opportunity

Crypto can make it faster and cheaper to pay workers.

You’re Hiring Wrong: Do It More Like Web3

By adopting a more open, fluid model, traditional firms would find it easier to attract talent and end up with a more passionate, engaged workforce.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The first limited liability company was established in Wyoming in 1977, and It took a decade for the federal government – and many business owners – to wrap their heads around this pivot in the idea of organization and ownership in business. Coincidentally, it seems Wyoming yet again serves as the legal birthplace of this new type of enterprise, as it is the first state to officially recognize a decentralized autonomous organization (DAO) as a business entity.

DAOs represent the most dramatic shift of structure, governance and asset management in business in our contemporary lives. Though many DAOs that govern treasuries have fallen prey to losses due to exploits or bugs in the code, these issues are a reflection of the greater need across all of Web3 for robust auditing – and not a reflection of the value of decentralized governance itself. In concept, DAOs now stand out as the most significant leap in terms of how we can think about running and managing organizations since the disco era.

Parker McCurley is the founder of Decent, a decentralized autonomous organization. This article is part of CoinDesk’s Future of Work Week series

By and large, however, the primary questions concerning DAOs in the larger conversation remain fundamental in nature. Chiefly, what exactly are the principles that define organizations and businesses, and can DAOs meet and redefine those standards in a healthier, more equitable way?

Open-source access to knowledge

In most business structures, information is kept secret, as though knowledge itself assigns a monetary right to ownership. In extreme cases, we have even witnessed manufacturers purposefully designing products so that owners are unable to repair or modify them out of fear that may lead to the increase of reverse-engineered designs. Thankfully, right-to-repair laws are starting to come to the U.S., but when even physical items have become inaccessible to inquiring minds, we’ve crossed a line when it comes to stifling competition and knowledge of how the world works. Locking innovative technologies in proprietary forms suppresses valuable information that could be used to improve systems and conditions for all.

This exclusionary behavior inhibits innovation by design, prioritizing proprietors’ need to generate value and prohibiting competitors from piercing their monopoly. Imagine if the entire human genome had to be rediscovered to perform genetic research. Think of all the ways that keeping information in silos can damage advancements in nearly every field of science, health care, business and entertainment. Unfettered access to information leads to innovation, and innovation enables emerging technologies to evolve in ways that serve to advance knowledge in naturalistic and representational ways. Empowering individuals is the catalyst for true societal progress.

Read more: The Coming InDAOstrial Revolution

Open-source methodologies break down the walled gardens built by privileged corporations and restore to all the freedom to innovate, paving the way for society to progress. However, a major roadblock to open-source approaches becoming more common is the lack of uniform standards of earning income from contributions.

Simply put – it’s hard to get paid to create something that will be given away for free.

The labor proposition

Being part of something greater than oneself offers a source of meaning and purpose.

The approach to open-source contribution in the tech sector has a long and storied history of people who have shared their specific knowledge or skill and expected nothing in return but the satisfaction of work and its potential impact. Contributing to open-source projects, however, is difficult for most people who are exhausted trying to make ends meet and pay bills by working their day jobs. As a result, creators and contributors for many open-source projects are well-intentioned volunteers who have limited time and attention to allocate.

Read more: Bitcoiners Are Biohacking a DIY Coronavirus Vaccine (2020)

The paradox here is clear: Altruistic projects often cannot be bankrolled by those who would be most helped by those innovations. Physical and emotional constraints, economic barriers, class antagonisms and scarcity of leisure time limit contribution and support from the individuals whom the projects are intended to benefit most.

The accumulation of wealth

In a proprietary organization, considerable work is extracted from the worker, which is not matched in compensation.

The pursuit of wealth is not inherently bad, and the idea that successful wealth creation must be unethical, selfish or greedy is false. Predatory profit motives are the problem – when a hierarchical system of revenue and earnings becomes more important than an equality of social prosperity, the system grows inhumane.

Read more: We’re Freaking DAOing It’: The People Who Think DAOs Are the Future of Work

A common word heard in the world of open-source and cryptocurrency is meritocracy. A meritocracy ensures that work of value yields wealth of equal value. In other words, it’s a system that should reward members strictly based on their contribution toward the system’s goals. Sadly, in a proprietary system whereby economically or politically advantaged actors can opt in to increase wealth without contribution, meritocracy is impossible.

Once individuals are tricked into mistrusting open-source methods as a potential pathway to wealth, they face a sobering truth: In our society, it’s far easier to contribute to the proprietary system and be happy with the drip-feed of trickle-down economics than to attempt an alternative approach.

Enter DAOs

DAOs are the best model we have to create an open-source meritocratic framework for promoting unbiased knowledge, work and wealth. In practice, here is what DAOs can offer as solutions to the above conditions.

Openness

• DAOs revolve around a shared mission that inspires their members to value the significance of their work.
• In a DAO, all information required to understand the mission, goals and objectives is openly available to all.
• The strategy by which a DAO accomplishes its mission can be contributed to, and updated, via open forums in real time, allowing a DAO to redirect and iterate its own strategic path quickly and efficiently.

Labor

• DAOs can publish specific and granular tasks that contribute to their greater goals and mission. This work should be denominated in levels of granularity based on risk and required resources so that the DAO supports the spectrum from livable wages to an hour of one’s time.
• By providing access for global contributors, the DAO provides more opportunities for scalable employment scenarios than a traditional company hiring full-time employees in its own region.
• Available work becomes an open meritocratic marketplace that’s remunerated based on contribution to the overall mission and goals of a DAO and serviceable by anyone.

Wealth

• Through the tokenization of labor hours and expertise, members are compensated fairly, based on contributions, resulting in a meritocratic reward and governance system.
• Over time, assuming the mission of a DAO is truly valued by society, the desire to contribute or govern the DAO will increase and drive demand for consistent participation.
• As the DAO succeeds, so do all its members.

DAOs present a clear path to coordinating meaningful labor opportunities and ethical wealth creation in an open-source design, and will reshape the future of business.

Further Reading of CoinDesk’s Future of Work Week series:

How to Get a Job in Crypto

Cryptocurrency jobs are on the rise. Here are some top tips on how to start your new career in the booming crypto industry.

What You Need to Know and Do to Get a Job in Crypto

There is a boom in crypto jobs, but do you need to be “crypto-native” to qualify? Here’s how to land a job in crypto.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The first limited liability company was established in Wyoming in 1977, and It took a decade for the federal government – and many business owners – to wrap their heads around this pivot in the idea of organization and ownership in business. Coincidentally, it seems Wyoming yet again serves as the legal birthplace of this new type of enterprise, as it is the first state to officially recognize a decentralized autonomous organization (DAO) as a business entity.

DAOs represent the most dramatic shift of structure, governance and asset management in business in our contemporary lives. Though many DAOs that govern treasuries have fallen prey to losses due to exploits or bugs in the code, these issues are a reflection of the greater need across all of Web3 for robust auditing – and not a reflection of the value of decentralized governance itself. In concept, DAOs now stand out as the most significant leap in terms of how we can think about running and managing organizations since the disco era.

Parker McCurley is the founder of Decent, a decentralized autonomous organization. This article is part of CoinDesk’s Future of Work Week series

By and large, however, the primary questions concerning DAOs in the larger conversation remain fundamental in nature. Chiefly, what exactly are the principles that define organizations and businesses, and can DAOs meet and redefine those standards in a healthier, more equitable way?

Open-source access to knowledge

In most business structures, information is kept secret, as though knowledge itself assigns a monetary right to ownership. In extreme cases, we have even witnessed manufacturers purposefully designing products so that owners are unable to repair or modify them out of fear that may lead to the increase of reverse-engineered designs. Thankfully, right-to-repair laws are starting to come to the U.S., but when even physical items have become inaccessible to inquiring minds, we’ve crossed a line when it comes to stifling competition and knowledge of how the world works. Locking innovative technologies in proprietary forms suppresses valuable information that could be used to improve systems and conditions for all.

This exclusionary behavior inhibits innovation by design, prioritizing proprietors’ need to generate value and prohibiting competitors from piercing their monopoly. Imagine if the entire human genome had to be rediscovered to perform genetic research. Think of all the ways that keeping information in silos can damage advancements in nearly every field of science, health care, business and entertainment. Unfettered access to information leads to innovation, and innovation enables emerging technologies to evolve in ways that serve to advance knowledge in naturalistic and representational ways. Empowering individuals is the catalyst for true societal progress.

Read more: The Coming InDAOstrial Revolution

Open-source methodologies break down the walled gardens built by privileged corporations and restore to all the freedom to innovate, paving the way for society to progress. However, a major roadblock to open-source approaches becoming more common is the lack of uniform standards of earning income from contributions.

Simply put – it’s hard to get paid to create something that will be given away for free.

The labor proposition

Being part of something greater than oneself offers a source of meaning and purpose.

The approach to open-source contribution in the tech sector has a long and storied history of people who have shared their specific knowledge or skill and expected nothing in return but the satisfaction of work and its potential impact. Contributing to open-source projects, however, is difficult for most people who are exhausted trying to make ends meet and pay bills by working their day jobs. As a result, creators and contributors for many open-source projects are well-intentioned volunteers who have limited time and attention to allocate.

Read more: Bitcoiners Are Biohacking a DIY Coronavirus Vaccine (2020)

The paradox here is clear: Altruistic projects often cannot be bankrolled by those who would be most helped by those innovations. Physical and emotional constraints, economic barriers, class antagonisms and scarcity of leisure time limit contribution and support from the individuals whom the projects are intended to benefit most.

The accumulation of wealth

In a proprietary organization, considerable work is extracted from the worker, which is not matched in compensation.

The pursuit of wealth is not inherently bad, and the idea that successful wealth creation must be unethical, selfish or greedy is false. Predatory profit motives are the problem – when a hierarchical system of revenue and earnings becomes more important than an equality of social prosperity, the system grows inhumane.

Read more: We’re Freaking DAOing It’: The People Who Think DAOs Are the Future of Work

A common word heard in the world of open-source and cryptocurrency is meritocracy. A meritocracy ensures that work of value yields wealth of equal value. In other words, it’s a system that should reward members strictly based on their contribution toward the system’s goals. Sadly, in a proprietary system whereby economically or politically advantaged actors can opt in to increase wealth without contribution, meritocracy is impossible.

Once individuals are tricked into mistrusting open-source methods as a potential pathway to wealth, they face a sobering truth: In our society, it’s far easier to contribute to the proprietary system and be happy with the drip-feed of trickle-down economics than to attempt an alternative approach.

Enter DAOs

DAOs are the best model we have to create an open-source meritocratic framework for promoting unbiased knowledge, work and wealth. In practice, here is what DAOs can offer as solutions to the above conditions.

Openness

• DAOs revolve around a shared mission that inspires their members to value the significance of their work.
• In a DAO, all information required to understand the mission, goals and objectives is openly available to all.
• The strategy by which a DAO accomplishes its mission can be contributed to, and updated, via open forums in real time, allowing a DAO to redirect and iterate its own strategic path quickly and efficiently.

Labor

• DAOs can publish specific and granular tasks that contribute to their greater goals and mission. This work should be denominated in levels of granularity based on risk and required resources so that the DAO supports the spectrum from livable wages to an hour of one’s time.
• By providing access for global contributors, the DAO provides more opportunities for scalable employment scenarios than a traditional company hiring full-time employees in its own region.
• Available work becomes an open meritocratic marketplace that’s remunerated based on contribution to the overall mission and goals of a DAO and serviceable by anyone.

Wealth

• Through the tokenization of labor hours and expertise, members are compensated fairly, based on contributions, resulting in a meritocratic reward and governance system.
• Over time, assuming the mission of a DAO is truly valued by society, the desire to contribute or govern the DAO will increase and drive demand for consistent participation.
• As the DAO succeeds, so do all its members.

DAOs present a clear path to coordinating meaningful labor opportunities and ethical wealth creation in an open-source design, and will reshape the future of business.

Further Reading of CoinDesk’s Future of Work Week series:

How to Get a Job in Crypto

Cryptocurrency jobs are on the rise. Here are some top tips on how to start your new career in the booming crypto industry.

What You Need to Know and Do to Get a Job in Crypto

There is a boom in crypto jobs, but do you need to be “crypto-native” to qualify? Here’s how to land a job in crypto.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

We brought some very interesting speakers to Consensus 2022 earlier this month, and while I believe the plan is to publish the full videos in the near future, I’ve always found it easier to pick information up by reading it than by watching or listening to it. This week, I’m continuing my exploration into transcripts with snippets from two conversations held at Consensus: fireside chats with Deputy Treasury Secretary Adewale Adeyemo and Ripple CEO Brad Garlinghouse.

You’re reading State of Crypto, a CoinDesk newsletter looking at the intersection of cryptocurrency and government. Click here to sign up for future editions.

Financial stability

The narrative

I sat down with Deputy Treasury Secretary Adewale Adeyemo earlier this month at CoinDesk’s Consensus 2022 for a fireside chat. I think it was quite enlightening, and I hope you do as well. To that end, some of the discussion is below.

Also: My colleague Zack Seward sat down with Ripple CEO Brad Garlinghouse. I’ve posted a partial transcript of that conversation as well.

Why it matters

Both Adeyemo and Garlinghouse have played significant roles in the crypto industry, particularly over the past 18 months.

These are only partial transcripts that have been edited for brevity. I’ll send around a link when we publish the full videos.

Breaking it down

Nikhilesh De: We’ve all seen the President’s Working Group report, and I know Treasury is working on reports related to that. Could you just provide an update: How are these reports looking? Are there any specific additional policy recommendations you think will come out of them? Or what are you looking at just with stablecoins in general now?

Adewale Adeyemo: I think the truth is that the President’s Working Group laid out in lots of ways where we are in terms of stablecoins and went beyond just what Treasury was doing. But the President’s Working Group reflected the views of regulators in the space, and it called for legislative action. Now we’re engaged in conversations with members of Congress, across parties, because we know this is a bipartisan issue. What we can do here is to provide a regulatory framework that protects financial stability, but also, as we think about the digital asset space, I think it’s important for us to think not only about financial stability but also about consumer and investor protections. How do we also think about national security? And how do we think about these things in a way that allows us to promote what I would call responsible innovation, and gives those people who are in this space the ability to innovate, within a sense of “this is the regulatory architecture that will govern here in the United States.”

While we’re focused on the United States, I recognize that one of the benefits of digital assets is they’re global in nature. And we want to make sure that in the United States, we lead in thinking about these regulatory issues. But in leading, we also bring the rest of the world along with us so that you’re facing a regulatory regime that looks similar around the world, rather than differentiated.

As you alluded to, terraUSD and luna collapsed dramatically last month. Are algorithmic stablecoins, which weren’t really mentioned in the working group report, something that you’ll now be taking a look at? Is that something that Treasury will publish more reports on or recommend action on to prevent that from happening again?

I think the challenge that you have is when a stablecoin isn’t very stable, that leaves people with a great deal of concern. Ultimately, one of the things that is true of digital assets, that’s true of fiat currency, is that trust is a major part of this. You want to be in a position where people understand the products that they are dealing with. My view is that ultimately, that’s why we think legislation in this area is needed in order to give regulators the authorities they need for stablecoins at large.

But I do think you have to look at algorithmic stablecoins and think through what kind of special disclosures, if any, need to be provided there. From my standpoint, one of the most important things we can do for consumers and investors is make sure that they understand the products that they are dealing with, not only in the digital asset space, but in all spaces. Providing them with information that allows them to make better choices is going to be critical here. I think that the reality is that people need to understand where they’re putting their money, and what’s backing it, frankly, going forward.

You also mentioned the unhosted wallet rule earlier, which I know was kind of put on the back burner in the beginning of 2021. Is that something you’re seeing as a rule that the U.S. will actually look to implement? Or is that just more kind of like a framework that you’re looking at for potential future rulemaking?

I’m not going to get ahead of our rulemaking process. But I do think that one of the things that we’re focused on is how do we address the challenges that unhosted wallets create for national security and for illicit finance. We understand and respect the need for, and the desire to [have] privacy, but we need to make sure that we’re also in a place where we’re not creating avenues where those who want to move funds illicitly are able to use digital assets more than traditional assets.

We know that criminals and those who are looking to move funds illicitly don’t only use digital assets, they use traditional assets as well. The thing we don’t want to do is create an advantage for them to move into the digital space. That’s not to your advantage, and it’s not to our advantage. That’s why we think that thinking about the travel rule and the unhosted wallet rule make sense. But we want to do it in a way that addresses the fact that the thing we know that the way we solve these challenges, the way we address them, is about innovation and making sure that we give you the room to innovate within a regulatory architecture that allows us to protect our national security, consumers, investors and financial stability.

Treasury is obviously working on policy recommendations around stablecoins. But a lot of the conversation that I’ve been hearing, at least from the folks I interact with, is there’s this growing question of whether existing laws make sense for addressing digital assets. So that’s taxes, as we just mentioned, KYC/AML, but also even some of the independent agencies and how they’re approaching it. What are your thoughts? Does it make more sense to try and come up with a “from the ground” brand-new regulatory regime or are the existing rules sufficient?

Yeah, I think it’s both. Honestly, you’re going to need in some places additional legislation because when you envision some of the rulemakings, no one thought about digital assets. But in other places, we’re going to be able to, if we’re innovative and meet the innovation of industry, be able to find ways to bring digital assets into the regulatory regime that already exists.

I think this is like when we’re trying to think about the travel rule. We think this is a place where we have the tools to be able to think through a regulatory regime that makes sense. I think you’re right that all of the regulators are going through this conversation internally in terms of “how do we think about our regulatory regime” and how it applies to digital assets. There you may also see them take some regulatory steps, but also over time, you may also think about what additional regulation is going to be needed.

What I know to be true is something you all know far better than me, [which] is that the digital asset landscape that exists today is not going to be the same one that exists two years from now, three years from now, five years from now. I think the thing as regulators that we need to be able to do and policymakers we need to be able to do is to think through how we build a regulatory architecture that is flexible enough to create opportunities for that innovation in a way that is responsible, and gives people confidence that being engaged in this space is something that is happening within the rules of the road that people expect.

Are there any ideas, tools or projects in the sector that you’re really paying attention to, that have your interest on a personal level?

I think the thing I’m paying attention to in this space, and the same thing I’m paying attention to, across the financial sector in general, is, what can we do in terms of financial inclusion? It’s a major issue for me, not only internationally, I mentioned Afghanistan. But even think about here in the United States, there are so many places where you don’t have access to finance. I think the question is, “how do we make the payment system more efficient and effective going forward?” I think the key is going to be how do we ensure that as more people participate, you have the right types of consumer protections in place, and you have the right types of transparency.

Ultimately, you want to be able to provide remittances at far lower cost to people. I know that there are communities all over this country where people are sending money back to families and other countries, and they are being charged a great deal of money to do that. What we can do to reduce the frictions and the cost and that space, I think it’s critical. It’s also critical in our country to think through how we can use digital assets to reduce the cost of transacting here. So those are the things that I’m paying the most attention to.

Ripple’s Garlinghouse

CoinDesk Deputy Editor-in-Chief Zachary Seward spoke to Ripple Labs CEO Brad Garlinghouse at Consensus 2022. A partial transcript follows.

Brad Garlinghouse: The headline for me is I feel like [the Securities and Exchange Commission’s lawsuit] looks good in large part; I think it’s very clear. The more that has come out, the facts are on our side. I think it’s more and more clear [that] the law is on our side. But we have spent … when this is all said and done, we will have spent over $100 million on legal fees fighting the SEC, and the dynamic there is, in my opinion, the SEC bullies companies into settlement because they can’t afford to fight.

The reason why this fight is so important isn’t just for Ripple. It’s really for the whole industry. It was literally four years ago this week that Bill Hinman, the [then] director of Corporation Finance at the United States Securities and Exchange Commission, gave a speech saying that ETH was not a security. And by the way, let me be clear, I do not think ETH is security. I don’t think XRP is a security. But at the time we viewed this as “isn’t it great that four years ago, we’re starting to provide some leadership and some clarity.” And I view this as actually a very positive sign. I remember there’s emails which now the SEC has read from our internal documents, where I sent the team a note saying, “Hey, this is great news. We now have clarity of how the SEC is thinking about this. They used some parameters around decentralization and what have you.”

Look at the fact that four years have gone by. And we still don’t have clarity about how the SEC is going to say what is and is not a security. It’s worse, actually. Now the SEC, the current chair, [Gary] Gensler is really walking back the statement around ETH. He has been asked directly “is ether a security,” [but] he won’t answer the question. How can we be competitive in the United States in an industry where the primary regulator will not provide that clarity?

My experience in crypto is the vast, vast, vast majority of people want to do right by the rules. But you’ve got to know what the rules are. I think the Senate bill that you’re describing, I think is a constructive step in that regard, and [can] provide some clarity. There’s a bill that was introduced in the House side called the Digital Commodity Exchange Act, which we certainly have been very active advocates of.

I think maybe the most important thing is this is forward progress. I expect there will be some hearings around these bills, and when there’s hearings that bring attention to the lack of clarity, and I think it catalyzes and builds momentum to win, I think it’s open for debate. I’ve talked to some very smart people that think realistically, either the House side or the Senate side, it’s you know, a year away before something gets passed, which, you know, that’s a long time from now. And I think the U.S. every day is losing competitiveness, relative to other markets that have clear regulation, you know, clear leaning in.

Zack Seward: So it’s been 18 months, it’s been a bit of stasis. But certainly, you’ve been doing a lot of work, the business of running this company does not stop, how are you describing the value proposition of Ripple Labs here in 2022?

We only work with regulated institutions, globally. Ninety-five percent of our customers are non-U.S. customers already. Certainly the U.S. case has – we’ve been able to have one or two contracts we signed here in the United States, but it’s been slow going in the U.S. But the great news is demand for one of our core products, we call On Demand Liquidity – that’s the product using XRP to move liquidity for institutions that grew already at a billion (dollar) run rate last year, that grew 8x year-on-year and Q1. The demand is clearly there.

And I think one of the opportunities for everyone in crypto is to make sure we’re solving real problems. I get super excited about real-world enterprise solutions. NFTs [non-fungible tokens] are certainly an area that I think is here to stay. I maybe somewhat controversially said recently that I thought NFTs were underhyped. People were kind of surprised because they’re pretty hyped. What I was calling out is I don’t know how to think about NFTs in the context of [say,] is one artist better than the other? Is a Van Gogh worth more than Picasso? I don’t know. What I do know is there’s a lot of NFTs in terms of tokenization of assets, around real estate, around patent portfolios, around licensing rights. There’s all kinds of stuff that I think NFTs will manifest in a way that is great for industries by reducing transaction costs, making these industries more efficient. That’s where I think NFTs are underhyped, in terms of how they will integrate into our economy broadly.

I also will say … I think all boats rise, and one of the most frustrating things and you know, CoinDesk has certainly written about this, the tribalism in crypto is holding us all back. We just got to f**king stop it. We have to, we’re all on the same team. I really believe that what’s good for crypto is good for Ripple. I try to be really careful about, even on stuff that I feel like I don’t understand, I’m not trying to bad mouth … But I think what’s good for crypto is good for everybody in the industry. I think the tribalism holds us back in a really big way. I am a person who believes in climate change. I’m a person who believes that carbon production is something we got to pay attention to. Again, we’re all on the same team here. I think the extent we can use more efficient technologies for solutions, then we should use those. I will pick on the Yuga Labs experience, the transaction fees – let’s just boil down. Blockchains are all about removing middleman costs, right?

So the Yuga Labs experience, the transaction fees were 40%. I own bitcoin, I’ve said that publicly before, I own ETH, I own XRP, not surprisingly – I think all of them can do well. I think the energy dynamic is a real one. I think we should be intellectually honest about what the real math is, and what are the implications? … I didn’t go sell bitcoin because it’s proof-of-work.

Biden’s rule

Changing of the guard

It’s starting to seem unlikely we’ll see any rapid movement on filling in some of these current roles that have acting heads.

Elsewhere:

• (I’ve actually been on vacation the last few days so this will remain blank.)

Outside CoinDesk:

• (This space intentionally left blank.)

Kevin, you just don’t get it. They didn’t actually pay for Snoop. They paid for a receipt saying they know Snoop exists somewhere, and that they can think about him anytime they want.

— Ben Collins (@oneunderscore__) June 21, 2022

If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at nik@coindesk.com or find me on Twitter @nikhileshde.

You can also join the group conversation on Telegram.

See ya’ll next week!

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

By Michał Domarecki, CEO and Co-Founder of Synapse Network

Despite Bitcoin’s recent market struggle, its market cap still exceeds over $390 billion, showing an increasing interest in the asset class. But the industry has much to learn from the retail-investing surge that occurred at the start of the COVID-19 pandemic. As crypto receives some bad press regarding the recent Luna crash, it becomes critical for the industry to be more accessible than ever to achieve its lofty goals of decentralization in order to pull more HODLers into the fold.

But crypto entry barriers hold many of these potential crypto enthusiasts back. It’s challenging to enter the crypto space without an in-depth understanding of the crypto ecosystem and without the knowledge required to begin trading in the space. But how can crypto become more accessible? The answer to this question is critical for the industry to endure what could become a crypto winter. 

Making investments accessible for normies

The post-pandemic boom paved the way for a new surge of investors via online brokers. One of the biggest motivations for new investors during this time was the ability to make smaller investments, as stated in the FINRA Consumer Insights: Money & Investing 2021 report. For example, Robinhood, a platform allowing newbie traders to dip their toes in the stock market pool, exploded during the pandemic, with a current user base of around 31 million verified users as of May 2022.

In addition to trading small amounts of money, Robinhood’s easy-to-use platform made investing less daunting to younger investors and proved a great entry point for those looking to use their spare change to open a crypto portfolio. While Robinhood’s platform offers crypto trading with little fees, it only supports taxable brokerage accounts and doesn’t offer any fixed-income investment products.

But other crypto trading platforms that offer more crypto options, such as Coinbase, have their own set of issues to sort out, mainly navigating a seemingly complex UX. Artkai, a global digital product design and development team, ran a study with more than 30 blockchain-related projects and found that most crypto platforms’ UX design was inaccessible for those who are not crypto and tech-savvy.

In order to be accessible to newcomers, the crypto space needs to think strategically. Combining the UX of Robinhood and the plethora of crypto trading options of Coinbase could help break down the crypto-entry barriers and bring new players into the space.

Crypto Education 

But solving the UX issue only skims the surface of some of the issues crypto newbies encounter. Twenty-nine percent of people who have never bought cryptocurrency say their doubts about what to do with it prevent them from buying, according to a study conducted by CES Tech. That would’ve been expected three years ago. But considering the undeniable push towards mainstreaming digital assets in the latest bull run, that over a fourth of investors don’t even know what to do with the novel assets should worry developers across the board.

Educating the public on how and what they can do with their crypto assets becomes crucial in moving the needle towards mainstream crypto usage. Digital payments have entered a new era, one where many are living with crypto and digital assets, but there are still those who are clueless. Just like credit cards weren’t immediately accepted, a new form of digital assets needs time to become normalized. A recent bill signed last year in Georgia perfectly exemplifies how currency education in high schools pushes forward educating the public about crypto.

But a more pressing problem arises from the abundance of crypto scams. Scams and security issues hold back normies from entering the crypto market, and for good reason. Therefore, before investors can even start small, they need to know what they are getting into and have some baseline of education about what crypto is and what to look out for.

Creating apps or educational materials helps users understand how to spot a scam and educates the public on what to be aware of when investing. Along with this, creating accessible user-friendly wallets will push normies towards joining the crypto sphere. Hopefully then the market can jump back and even prosper in the next bull cycle. 

About the author:

Michał Domarecki is a multi-entrepreneur and investor with over 15 years of experience in business management. After founding and running successful international businesses, in IT, transport, and logistics, Michał became co-founder and CEO of Synapse Network. Passionate about cryptocurrencies and blockchain, Michał also founded a crypto community and acts as an advisor and investor in promising blockchain start-ups.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In 2012 when Superstorm Sandy hit New York City, I found myself walking from my apartment in Queens to my office building that had flooded in the Financial District. Even though the city was shut down, I spent the day trying to ensure everyone got paid. That meant typing up wire letters, printing them out, walking to the CFOs office for signatures, faxing them to the bank and then waiting for the bank to call and confirm the amounts.

Even back then, the system was obviously broken – a company should be able to pay its people without requiring its accounting staff to go to such extremes.

Megan Knab is the co-founder and CEO of Franklin, a new crypto-native payroll company. This article is part of “Future of Work Week.”

In the 10 years since, so much of our daily workplace technology has transformed, and yet the most basic pieces of payments infrastructure have not kept pace. Cloud computing has largely beat on-premises software. Zoom is now an essential tool for most businesses and workers. The Great Resignation means workers are empowered to dictate their daily habits, including remote work and time off.

The U.S. payroll industry is a $62 billion behemoth, according to IBISWorld, and fit to be disrupted by the emergent and powerful tools enabled by blockchain.

Payroll today is built on top of traditional banking rails, meaning it is rife with inefficiencies, barriers to entry and high cost. An entire ecosystem of payday lenders, overdraft fees and expensive check cashiers has emerged to “support” the payroll industry. These intermediaries cost Americans upwards of $15 billion annually.

See also: It Can’t Be ‘Decentralization or Bust’ | Opinion

Unlike other areas of fintech, payroll innovation has been largely limited to risk shifting. Some payroll companies simply float cash to their corporate customers, facilitating the feeling of “instant” payroll while actually not addressing any of the underlying inefficiencies. While there has been experimentation with prepaid debit cards, mobile payments and digital wallets, there are additional ways companies ought to employ to ease the accessibility of workers’ paychecks.

One of the core building blocks of the future of work must be a digitally native, significantly cheaper payroll infrastructure. It should allow for the meshing of digitally native payment features and legacy medical benefits, retirement accounts and tax requirements.

The new payments stack of Web3 offers the ability to instantly settle transactions – potentially cutting lending costs down almost to zero. A crypto-native stack also has crypto-native innovations:

• Streaming payments so that workers are accruing their earnings in real time.
• Faster, cheaper cross-border payments.
• Ease of integration with investment and benefits products.

This oft-overlooked part of fintech, payroll, is one of the fundamental building blocks for the health and wealth of society. In the United States and Canada, we have payroll-based insurance models meaning that healthcare for many is dependent upon employment. Payroll infrastructure and data was an integral part of facilitating COVID stimulus payments.

See also: Not Everyone Can Afford to Be Satoshi | Opinion

It is the mechanism by which our government collects tax revenue, a part of how our justice system levies fines and one of the key motivating factors in workforces. Economists and analysts look to firms like ADP for early data on payroll trends in advance of jobs reports to gauge economic health.

The Web3 industry has been innovating for years on payments and other kinds of wealth creation products. All of that creativity and talent could be lost if the most basic and fundamental business operating activities are not reformed.

While the accounting office of today may not always be as bad as sending faxes during a natural disaster, technological innovation has been tepid. Web3 technologists have so much green space to innovate in and a responsibility to build the applications of tomorrow on solid ground.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

PSA to traditional hiring managers: You’re doing it wrong.

Over the last two years, a movement has emerged in Web3 that is turning the status quo talent acquisition process on its head – and creating a more constructive method for attracting and retaining talent.

Decentralized autonomous organizations (DAOs) have paved the way for this paradigm shift, offering an inverse approach to the current process that many professionals have experienced on their journey to employment.

Avi Meyers is the director of governance and partnerships at Flipside Crypto, a blockchain analytics firm. This article is part of CoinDesk’s Future of Work Week.

Most businesses hire by inclusion via exclusion. They interview a bunch of candidates in a formal setting, exclude most of them and include the winners.

DAOs actualize the opposite: exclusion via inclusion – create an open environment, incentivize behaviors, reward top contributors.

While simultaneously building teams for Flipside Crypto and MetricsDAO, I became aware of the stark differences between these two methods – but also the merits of each.

See also: Pussy Riot, Political Action and the Future of DAOs | Opinion

And by reflecting on my own experiences, I’ve been able to identify a few easy steps that hiring managers can take to blend the best of both worlds. To explain, let’s first travel back to 2009.

Traditional Hiring: Inclusion via exclusion

Like many college graduates looking for employment during the Great Recession, I began frequenting job fairs in the Boston area. On one fateful evening, I wandered into a dreary downtown hotel for a financial technology job fair.

Going in I had zero expectations, and maybe that’s why two weeks and 10 grueling interviews later, I got my first job offer.

My skill set definitely did not fit the role. The interview process was generic and the firm’s approach to hiring was narrowed to a few select schools with candidates of a certain pedigree. This meant the company was forcing a target persona onto candidates who were then forced to fit the mold. The recruiters weren’t much interested in exploring an individual’s diverse talents.

Unfortunately, my experience in the hiring process is quite common and causes a lot of young hopefuls to land jobs where they don’t belong. It’s not the people who are the problem, it’s the foundational process:

Inclusion via exclusion.

That is the way traditional companies find talent: exclude most, include the winners.

They evaluate on a finite set of criteria, assess abilities through a formal and confining process, and develop a set of assumptions about the candidate based on collective feedback from the hiring team.

Sure, it works, but could it be better? Of course it can.

Web3 Hiring: Exclusion via inclusion

So what does better look like? First, some perspective.

In 2018, I made the leap full time into what is now called Web3, joining Flipside Crypto. Our business model took off at the intersection of data analytics and Web3 community growth, and after fostering a community of over 12,000 data analysts, we began contributing to and incubating DAOs as part of our core objectives.

MetricsDAO was the first one we bootstrapped. Incubating it meant rolling up our sleeves, building teams (referred to as pods), and growing a brand new type of organization from zero to one. The amazing thing about DAOs is how porous and fluid they are. Contributors come and go as they please, following their passions and delivering meaningful work to the organization when they feel like it.

Read More: What Is Web 3 and Why Is Everyone Talking About It?

As DAOs scale, the team must produce incentives to keep core contributors involved. These incentives come in the form of compensation (monetary or otherwise), privileges (like gated access) and leadership opportunities. In other words, through a free-flowing, inclusive model, talent is identified and rises to the top.

In this sense, DAOs are creating a talent pipeline and selection process opposite that of traditional businesses. It is more open, exploratory, creative, and natural. It is:

Exclusion via inclusion.

And yet, DAOs are beginning to integrate certain aspects of the traditional hiring process. For example, infrastructure providers, such as Wonderverse, Drepute and GitPOAP, are competing to build tools that could be used as Web3 “resumes,” where DAO contributors can track their contributions and experiences. Unlike traditional resumes, which require the hiring manager to trust what’s written on the paper (or verify it themselves), the new versions will display non-fungible or proof-of-attendance protocol tokens (NFTs or POAPs) attesting to past work and verifiable on-chain. This model also consolidates inherently diffuse DAO work into a single attributable form, making it easier for DAO leaders to assess a contributor’s relevant experience. New builders emerge in this field daily.

See also: DAOs and the Coming InDAOstrial Revolution | Opinion

On the other hand, traditional businesses have yet to adopt any strategies of the DAO talent acquisition funnel in a meaningful way – much to their own detriment. By integrating a more open, fluid model, traditional companies would find it easier to attract the right talent for open roles by allowing candidates to explore more freely, and ultimately end up with a more passionate and engaged workforce.

With that in mind, here are three easy steps that hiring managers can follow today to become more like Web3:

In the end, if you’re going to have to exclude people, at least do it by including them first.

Further Reading of CoinDesk’s Future of Work Week series:

How to Get a Job in Crypto

Cryptocurrency jobs are on the rise. Here are some top tips on how to start your new career in the booming crypto industry.

What You Need to Know and Do to Get a Job in Crypto

There is a boom in crypto jobs, but do you need to be “crypto-native” to qualify? Here’s how to land a job in crypto.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Bitcoin, the original cryptocurrency, is made possible by blockchain technology, a method of generating and tracking digital assets and processing transactions. When bitcoin is doing well, other cryptocurrencies are likely to be doing well. When bitcoin is doing poorly, other cryptos are likely also suffering.

Nobody, however, seems to agree on the price of bitcoin in the future.

Why 2021 Was a Good Year for Bitcoin

Over 2021, bitcoin enjoyed a steep rise in its market value. At the start of the year, a single coin was valued at $32,000, and by April that number had doubled. Traders were optimistic that wider acceptance of bitcoin by merchants and big banks would support the price.

However, the promise outran the reality — there was still no way to use bitcoin for much of anything except speculative, risky trading. A decline in the stock market in late 2021, and a fall in highly valued growth stocks, carried cryptocurrencies down as well. Bitcoin finished 2021 at about $47,300. As of June 24, 2022, bitcoin is selling for $21,145.

The Risk-Off Trade

Bitcoin’s price has continued to fall through the first half of 2022, as has the stock market. Investors have turned to assets that perform well in a time of a slowing economy, higher inflation and rising interest rates.

As cryptocurrency is still widely seen as a risky, speculative asset, this “risk-off” trade brought bitcoin down to below $20,000 in mid June. This represents a loss of over two thirds of the value bitcoin reached at its November 2021 peak of $69,000, with no signs of sustained recovery in sight.

Concerns over the high electricity use associated with bitcoin mining and the banning of cryptocurrency transactions by China also weighed on bitcoin’s value.  

Good To Know

Robert Breedlove, CEO of Parallax Digital, might be the most optimistic of all analysts on bitcoin. In 2021, Breedlove predicted a price of $12.5 million by 2031, seeing high inflation as the main driver of this run-up. With fiat currency losing its value, the thinking goes, some investors may turn to what they perceive as a safer haven in digital money. However, it should be noted that Breedlove previously predicted that bitcoin would surpass $300,000 by October 2021 — a month that saw a high price of $65,993.

Expanding Investment and Payment Use 

Nevertheless, as more companies adopt bitcoin as a method of payment, its value could stabilize. Major companies that already accept bitcoin include Microsoft, AT&T, Starbucks, PayPal and Amazon, although you must jump through a hoop or two to pay that way.

In addition, as more platforms make room for bitcoin trading, the market should expand among individual traders and investors. While Coinbase, Kraken and online investment firms like Robinhood and Webull all allow the purchase of cryptocurrency, big, traditional brokerages are just climbing onboard.

Goldman Sachs, for example, announced in April that it would give high-net-worth clients access to bitcoin and ethereum. Other brokerages, such as Schwab, Fidelity and TD Ameritrade, simply allow their clients exposure to the crypto market, although Fidelity will allow companies to allow their employees to invest up to 20% of their 401(k)s in bitcoin, NBC News reported.

For the most part, however, these companies offer trading in coin trusts and exchange-traded funds that hold crypto assets. 

What Is the Future of Bitcoin? Whales Dive In

The future price of bitcoin depends on whether digital currencies can serve as useful financial assets. There was little support for this concept among financial newsmakers in the early years, but some once-skeptical major investors have come around.

Buffet and Others Now Believers

Warren Buffett, whose Berkshire Hathaway company has rewarded investors with tremendous returns over decades, once described cryptocurrency as “rat poison squared,” and he swore he would never touch it. But by purchasing NuBank, a digital “neobank” involved in the crypto space, Buffet has given bitcoin a secondhand vote of confidence.

Lloyd Blankfein, former chairman of Goldman Sachs, has announced that he’s “evolving” on bitcoin and other cryptocurrencies. Jack Dorsey, founder of Twitter, resigned his job as CEO of that company to run Block, a payment processing leader that is now developing new digital currency applications. 

Adoption by these and other corporate leaders could support a reversal in bitcoin’s free fall and bring higher value by the end of 2022. 

What Will Bitcoin Be Worth in 2022 and 2023? Educated Guesses

User-generated cryptocurrency price predictions on CoinMarketCap forecast that bitcoin will reached $39,003 by June 30. For this to be the case, it would need to nearly double its current value.

Looking further ahead, two expert panels recently weighed in with bitcoin price predictions leading into next year. A 35-member group reported by Forbes expects bitcoin to start the new year at about $76,000.

The second panel is less bullish. That one, according to Forkast, scaled back an earlier target to $65,185 as 2022 draws to a close. The cryptocurrency exchange Changelly expects bitcoin prices to range between $53,039 and $64,734 in 2023, with an average target of $54,570.

Ian Balina, founder of crypto research firm Token Metrics, sees bitcoin in a down cycle due to general investor pessimism on risk assets, but he also sees a benefit from the development of Web 3.0, a new blockchain-based internet. That said, bitcoin is an old-school cryptocurrency, which could give Web 3.0 coins like chainlink and polkadot an edge over the longer term.

More practical uses of bitcoin and cryptocurrencies are coming online. When trading isn’t the only thing you can do with them — except for some digital shopping options — the value of these new assets could increase.

Takeaway

While many experts predict a positive future for bitcoin, it’s important to invest with caution. As the recent market has demonstrated, cryptocurrency is a volatile investment.

Daria Uhlig contributed to the reporting for this article.

Information is accurate as of June 24, 2022.

This article originally appeared on GOBankingRates.com: Bitcoin Price Prediction 2022

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In March, Federal Reserve Chairman Jerome Powell said it’s “easy to see the risks” of cryptocurrencies, and warned that central banks “don’t know how some digital products will behave in times of market stress.”

What they have seen lately will not give them comfort. The sudden and rapid collapse of popular crypto projects sheds light on the house-of-cards nature of many crypto products and provides the perfect “told you so” moment for already-wary regulators.

Tracy Basinger is a senior adviser at Klaros, a financial advisory and investment firm.

Jonah Crane is a partner at Klaros.

First, in early May, TerraUSD, an algorithmic stablecoin, rapidly collapsed, erasing billions of dollars of value in just a few short days. Then Celsius halted redemptions by customers who had deposited funds, and is believed to be nearing insolvency. The drastic moves by Celsius – and forced liquidations of leveraged positions – roiled crypto markets. Bitcoin briefly touched $20,000 and is down more than 70% since its November 2021 peak.

These debacles and the uneasiness they have caused will likely instill regulators and policymakers with a new sense of urgency to address issues that have gnawed at the crypto industry. But these problems and the decline in crypto prices could also present a great opportunity to create a clearer path forward. They come against a backdrop of already-accelerating regulatory pressure.

What regulators have said

In August 2021, the federal banking agencies launched crypto “sprints” and, in the fall of 2021, laid out their agenda for 2022. In November 2021, the President’s Working Group on Financial Markets (PWG), released a report detailing risks associated with stablecoins, including the risk of a panic akin to a bank run, and called on Congress to pass new legislation limiting stablecoin issuance to insured banks. Then in March 2022, President Biden issued an executive order on digital assets. The report acknowledged potential benefits of innovation in digital assets, but emphasized the downsides: The word “risk” appeared 47 times.

Read More: As Federal Agencies Organize, US States Continue to Lead in Regulating Digital Assets

A wide range of state and federal regulators have weighed in following the implosion of Terra, and again following Celsius’ troubles and the broader market collapse. After the Terra collapse, U.S. Treasury Secretary Janet Yellen called for a “comprehensive framework” governing stablecoins and urged Congress to act. Subsequently, the SEC was reported to be investigating the marketing of TerraUSD by Terraform Labs.

Just days after Celsius halted redemptions, Securities and Exchange Commission (SEC) Chairman Gary Gensler cautioned that crypto platforms promising high returns may be too good to be true. Meanwhile, state securities regulators in Alabama, Kentucky, New Jersey, Texas and Washington have opened an investigation into Celsius’ actions. After Terra’s failure, Gensler announced the agency would add 20 investigators and litigators to its unit dedicated to cryptocurrency and cybersecurity enforcement.

In addition, more than 40 states have some type of crypto legislation in place or pending in their legislature. And California Gov. Gavin Newsom recently issued an executive order on cryptocurrencies, mapping out a comprehensive regulatory framework for digital assets.

Ghosts of financial crises past

This latest market crash reveals just how much consumers could lose – two trillion dollars of crypto asset’s market cap have been wiped out. And both Terra and Celsius provide glaringly bad examples of the fragile financial engineering mixed with hyperaggressive promotion that has led regulators to see echoes of past financial crises.

The collapse of the Terra stablecoin and resulting market volatility will leave regulators who have been warning of the risks associated with crypto feeling vindicated. Terra experienced the equivalent of an old-fashioned bank run when investors began to lose confidence that they would always be able to redeem their token for a dollar. That’s exactly what the PWG (and many others, including Sam Bankman-Fried) warned would happen.

Moreover, Terra achieved its scale (roughly $18 billion in circulation at its peak) because it could be deposited into a yield protocol and earn up to 20% interest. Acting Comptroller of the Currency Michael Hsu recently compared yield farming to Ponzi schemes – and he’s not alone. The Anchor Protocol promised UST depositors 20% yields, with no realistic way to continue paying out interest if money stopped flooding in. Celsius used its borrowed assets as collateral to borrow more and make a series of risky bets – including investing in the Anchor Protocol – in search of returns to meet its promise to pay “depositors” 8%.

Read More: Defining Cryptocurrency Regulation Important for the Industry to Grow: Morgan Stanley

Finally, both Terra and Celsius caused volatility across crypto markets – a foreshadowing of the significant spillover effects that might occur if, say, Tether were to collapse. This kind of financial contagion risk is exactly what regulators try to prevent.

How to prepare

At this point, crypto companies should assume regulation is inevitable. If the industry wants to help itself, it must be at the table. But more than that, industry leaders must be willing to overhaul the way large portions of these markets work.

On stablecoins, industry leaders should clearly distinguish among different models and begin a dialogue about the ways in which certain models, and certain regulatory reforms, could achieve the regulators’ policy objectives. Amid the Terra crash, the market clearly viewed certain stablecoins – namely, 100% dollar-backed coins – as more stable than others. And yet Tether, which has broken the buck multiple times in recent weeks, remains a critical element of a major portion of crypto market activity.

For their part, regulators, too, should begin to recognize that not all stablecoins are created equal. Regulators were right to warn of “run risks” inherent in stablecoins, but have done little to distinguish between stablecoins and “unstable” coins. The New York Department of Financial Services, which regulates two stablecoin issuers, released public guidance requiring stablecoin reserves to be held in safe and liquid assets and be subject to independent attestations. This guidance provides an excellent foundation for developing a truly stable framework.

Hsu issued a call for public-private collaboration on developing stablecoin standards. That is an invitation the industry should accept.

More broadly, there needs to be a reckoning within the industry. The desire for open and decentralized crypto markets makes many participants averse to prescriptive rules. But inherently fragile products have served to accelerate and multiply the damage of a crypto downturn. Industry leaders should take advantage of the crypto winter to clear the underbrush that could be the kindling for the next inferno. It’s time to recognize that many products simply aren’t consistent with fair and orderly markets.

Read More: Here’s the Full Text of Biden’s Executive Order on Cryptocurrency

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.