Crypto is growing up: Goodbye yacht parties and NFTs, hello regulation and practical tech

• The three-day Messari Mainnet conference in New York was less expensive and less fun than a year ago.
• Gone were the Reddit bros and yacht parties, and in their place came suits and talk of regulation.
• Insider's Phil Rosen met with dozens of conference attendees and executives.

Cryptocurrencies are not dead, they are simply growing.

That's the feeling I got after spending three days rubbing shoulders with cryptocurrency founders, blockchain professionals, politicians, and executives at Messari Mainnet in New York City.

Unlike previous years, when the halls were filled with tech experts and Reddit enthusiasts, the majority of the 3,000 attendees were professionals representing companies or brands.

In the same conference last September - when events seemed to be more attended and tickets were more expensive - many of the conversations I had were about speculative betting, NFTs and the metaverse. She couldn't keep up with the interview requests, happy hours, and party invitations. She had even scored a ticket to a networking event aboard a yacht, a level of opulence that was not present at this year's event.

While cryptocurrencies have returned from a brutal bear market in 2022, prices are still well below their peak and some markets, like NFTs, are faring even worse: a recent report showed that 95% of digital collectibles are probably worthless.

Dozens of attendees told me this week that they found last year's conference livelier, livelier and more fun, though not necessarily more productive for industry players still standing.

It seems like a more boring scene could be a good thing.

"There is less hype, speculation, dress-up and boat parties, and more serious debate about opening up real-world assets like private equity, private credit, fixed income and other alternatives to investors for the first time." Carlos Domingo, executive director of Securitize, told me this. "Work to make this possible continued unannounced over the past few years, while attention focused on the hype."

No more get-rich-quick schemes

When money is easy and liquidity is high, there is no shortage of convinced snake oil sellers that they are waiting for the next big thing.

But in a bear market, it is much harder to digest a half-baked project or an obscure altcoin.

On Messari this week, Skybridge Capital founder Anthony Scaramucci, a Wall Street bigwig and former White House communications chief, seemed to be the only one who gave insight into a specific assetbut most speakers did not talk about investments.

Instead, the focus seemed to be on regulation, policy, and creating practical tools that could help bring the nascent technology into the mainstream. The panels had titles such as “Cryptocurrency Taxation and Accounting,” “What is the SEC's Ultimate Goal for DeFi?” and "How to make cryptocurrencies really useful."

At a press breakfast hosted by Coinbase, executives demonstrated how to pay for coffee using cryptocurrency and unveiled a new messaging feature for digital wallets that aims to streamline communication for peer-to-peer transactions.

"What will encourage skeptics is cryptography as a technology, and moving away from cryptocurrency as an asset and speculation," said Jesse Pollak, creator of Base, Coinbase's layer 2 ethereum blockchain. "We're moving more toward how cryptocurrencies are helping small businesses, restaurants, and advocacy groups. Those use cases are what move the needle for everyday people, not another get-rich-quick scheme."

Courtesy of Coinbase

Cryptocurrencies as an industry, he told me on Thursday, have entered a new era. Bear market or not, more products and new companies with real-world applications are emerging.

Jess Houlgrave, chief operating officer at WalletConnect, told me that the keep-your-heads-down mentality was reflected at the conference, which she thought was quieter than last year but of higher quality.

"Here there are key decision makers coming from the companies, less noise on the margins, fewer retail investors," Houlgrave said. "Events are still happening during a recession, but they are smaller, more curated events rather than flashy parties."

The notion of “invisible technology” continued to come up in conversations. The idea is that crypto apps will gain widespread adoption once people use them without realizing it.

"There are less gimmicky things, which reflects the maturity of the industry," Houlgrave said. "The business-to-business approach we're in now is here to stay, as cryptocurrencies won't be consumer-facing anyway. Over time, consumers will interact with blockchain every day, but they just won't know it."

Cryptocurrencies' biggest hurdle now, attendees said, has nothing to do with price action or investing in the next winning project, but rather figuring out how to continue innovating under the gaze of increasingly strict U.S. regulators.

The Long Shadow of Gary Gensler

Gary Gensler, chairman of the Securities and Exchange Commission, did not attend Messari Mainnet, but no one could stop saying his name. Scaramucci compared it to Jiminy Cricket, and presidential candidate Vivek Ramaswamy called the regulator a government dismissal.

The SEC, Ramaswamy said in a fireside chat, should reduce its staff to 25% because Gensler has "a group of people who show up to work who shouldn't have a job in the first place."

Gensler recently lost a battle with Grayscale after the SEC rejected its bitcoin ETF proposal. Aides said their problem with the SEC chief lies in his inability to articulate clear guidelines for cryptocurrencies.

“Gary Gensler cannot say whether ethereum is a security or not,” Ramaswamy told the audience. "Tomorrow, will a bank deposit be a security? The US dollar? There is an agency that intentionally obscures."

Lack of clarity is what cripples innovation, particularly in the US, Coinbase's Pollak told me, and is limiting the potential of those already in the industry while keeping skeptics on the sidelines. Singapore, Hong Kong and some European countries are becoming more attractive destinations for crypto companies looking to grow and make an impact.

Phil Rosen/Insider

"We need a clear policy framework so that people can innovate," Pollak said. "Innovators are moving out of the United States, moving toward regions that are being more proactive from a policy perspective."

To that point, the Singapore conference Sheet 2049 It happened days before Messari Mainnet. There appears to be no shortage of festivities and excitement in Asia's crypto scene, according to people who attended.

While I didn't find Messari Mainnet as fast or fun this year (a consensus opinion shared by many other attendees), that's not necessarily a bad thing. It just shows how priorities have changed.

The industry is growing and adults seem to be taking the lead.

"In a bull market there's so much noise and it's so distracting that nothing gets built," Pollak said. "The people who appear on the Mainnet now are people who keep their heads down and create incredible products."