CoinDesk Managing Director of Global Content Emily Parker joins Yahoo Finance Live to discuss the workforce reduction at Coinbase and how it’s part of a major issue in the crypto space after its earlier decline.
– Bitcoin holding steady over the last few weeks. You can see it trading just above 23,000. But the industry has certainly had its fair share of challenging headlines. From scams to bankruptcies and competing regulation bills, there is a lot going on in this space. Emily Parker, CoinDesk managing director of global content, is here to talk about it. Emily, let’s talk about– to start with, Robinhood. We just got the news out after the bell yesterday cutting nearly a quarter of its workforce, attributing part of that to the slowdown in its crypto business and the fact that investors simply aren’t as interested in crypto. We’re getting Coinbase next week. Is this a sign of what’s to come in the industry?
EMILY PARKER: Yes. I mean, well, first of all, it’s part of a larger trend, for sure. Robinhood pointed to the crypto meltdown and also to high inflation. But we’ve seen a lot of crypto-related layoffs across the industry. Coinbase, for example, laid off something like 18% of its workforce. And they are hardly alone. OpenSea. There’s been quite a few examples. So this is just the latest one.
The CEO of Robinhood sort of took responsibility for it by saying that maybe they were a little bit aggressive in spending before. And now they’re sort of paying the consequences of that. But that is part of the trend too. We saw during the bull market in crypto, there was really aggressive hiring, a lot of spending, a lot of FOMO. And now there’s some very, very large cutbacks with a high human cost.
– And as you just saw on the screen, Emily, the traders love it. 11% pop in the stock. It has been, frankly, a brutal month of headlines. And it’s been three days in August. You have the SEC investigating a crypto Ponzi scheme. Nomad lost $200,000,000. Solana now hacked. Is there a common thread between these three sequential stories?
EMILY PARKER: That they’re all bad. I mean, I think that’s the common thread. I mean, there’s so many different things happening in crypto, many of which are not good. But, no, they’re not exactly linked because we do have separate things going on at the same time. One are just general intermittent price crashes the other are these hacks, which are more of a security issue. And there were two big hacks. There’s a Solana hack. And then there was also a Nomad hack, which are quite different.
One was related to a bridge and one was related to hot wallets. But both left large losses. Then you also have, yes, this kind of regulatory– a lot of increased regulatory attention towards the crypto industry. That’s not necessarily a bad thing in and of itself. But those regulators are reacting to some of these bankruptcies, some of these badly managed companies, and some of these implosions.
– And perhaps the common thread from at least this side of the camera is that it’s distrust continues to spread if you’re an investor or if you’re a prospective investor, which might be equally important, but, shockingly, you see the price of Bitcoin up 22% in the last month. How big a problem is mistrust?
EMILY PARKER: Well, it’s really interesting that you use the word trust. That’s a really kind of important word in crypto. So what’s happening in the cryptocurrency industry is quite interesting because a lot of the major implosions are happening more from centralized institutions. Crypto is supposed to be all about decentralization. But when you look at something like Celsius, for example, Voyager, Three Arrows, these are not decentralized institutions by any stretch of the imagination.
And a lot of decentralized finance, or DeFi, have been performing better. So the whole point of crypto is that you’re not supposed to overly place your trust in these centralized institutions. And in some ways now we are seeing that lesson coming true because these centralized institutions are taking some of the harder hits.
– So Emily, from your perspective then, what needs to be done? Because, yes, you can say lawmakers need to do their part. Crypto firms need to do their part. But more specifically, I guess what does that look like?
EMILY PARKER: Yeah. So there’s so much that has to be done. I mean, that’s kind of what the lesson here is is that there’s just so much has to be done by such a variety of different actors. I think that pretty much– I don’t know. I don’t want to speak for everybody. But I think a lot of people in the cryptocurrency industry agree that regulation is necessary at this point and that had there been clearer and stronger regulation, we might not have seen some of the implosions that we saw. I mean, if you look at Celsius, for example, if there had been different regulation, maybe some of those deposits would have been better protected. That’s one example.
So there’s definitely a regulatory side. I mean, I think for stablecoins, that’s another one. There was the huge implosion of UST also led to losses of billions of dollars in values. I think we’re going to see stablecoin regulations relatively soon. But aside from regulations– and I just wrote about this in a piece for CNN– I think there also needs to be a lot more accountability within the cryptocurrency industry itself. I don’t think it makes sense for an industry that prides itself on decentralization to wait for the government to sort things out.
And there’s a lot more that could happen from ordinary investors from venture capitalists demanding greater transparency and accountability from these projects. I think a lot of the problem was that when there was sort of money falling out of the sky and the market was high, a lot of people were just like not really taking a hard look at some of these business practices. And there was just not very good risk management across the board.
– Indeed. It’s a great op ed you wrote. Crypto can’t rely on the government to save it from itself. But quickly, if we can ask about these two pieces of legislation, one from Senator Debbie Stabenow would hand oversight to the CFTC, and this other one that came out a couple of weeks ago from senators Gillibrand and Loomis. Do either of them get it right? Or if there’s one thing that the industry does in fact need from government, what is that?
EMILY PARKER: Well, I think both of these– look, with any of these bills, you’re going to see a lot of negotiation. You’re going to see a lot of fine tuning. So we don’t actually know like what these would actually look like in practice. But they do have a common theme. And that common theme is an effort to get more regulatory clarity.
And one of the big themes of both of these bills is trying to sort out some of the confusion between the SEC and the CFTC, which is very confusing in the cryptocurrency industry because it’s unclear what is a security and what is a commodity. And thus, it’s unclear who regulates what. And I think both of those bills are trying to establish some sort of clarity around the jurisdiction or just what falls under the purview of the SEC versus what falls under the purview of the CFTC.