WATCH: A former World Economic Forum executive explains why she worries crypto could

• Sheila Warren shares key crypto takeaways from the WEF’s 2022 meeting in Davos.
• She says investors shouldn’t think of crypto as a short-term flip but as a long-term investment.
• She explains why she’s concerned that the asset class may be restricted to accredited investors.

From May 22 to May 26, thought leaders and politicians gathered at the World Economic Forum’s annual meeting in Davos. Major themes up for discussion were macroeconomic, climate, and geopolitical issues. 

While blockchain technology and crypto weren’t front and center, the sector did have a more robust presence relative to previous gatherings, Sheila Warren noted. 

She’s the CEO of the Crypto Council for Innovation, a global alliance focused on advancing the inclusion and regulation of the crypto industry. For her, the takeaway from this year’s meeting is that blockchain technology has relevance across a wide variety of different industries and issues. 

While blockchain may be making strides on a global scale as a disruptive technology, the prices of even the strongest cryptos have fallen. Bitcoin is down by 57% year-to-date, trading at around $20,400 as of Wednesday, with ether falling at a steeper pace, down by 71% for the same period. 

Warren, who founded the WEF’s blockchain and digital assets team before her departure, noted that crypto is not immune to global shocks from geopolitical instability and broader political issues. However, she personally thinks that crypto winter is a great time for the development of the industry.

“A lot of the kind of scam nonsense tends to exit during this time because there’s more scrutiny on the industry,” Warren said. “And I think that’s a very good thing. And what’s left behind are people who understand building something new is not easy and it takes dedication and commitment and it takes time.”

Whether people should invest during this time depends on their risk tolerance and timeline, she noted. Investing in crypto is not a short-term flip, but rather a long-term commitment. There’s a lot of experimentation in the space and many of it will fail, which is not a bad thing, she added. It’s part of building a robust, secure, and new internet for everyone. 

Investors need to think through what’s needed and what’s new, she added. Keeping in mind that what’s going to succeed is very hard to predict. It’s based on a variety of variables, including what makes sense to people intuitively and what gets appropriate regulatory and policy support.

“If you’re in this for a guarantee, this is not the space for you, quite frankly, right? There are no guarantees in anything,” Warren said. “This is a space that’s growing and changing and shifting. I find the energy in this space, the enthusiasm tremendously infectious, but you got to be willing to stay the course.”

She pointed to Messari.io and The Block as great resources for research into projects that are unique. 

Crypto as an investable asset class brought Warren to her next point, which is that anyone willing to put in the time to do their research should have the ability to invest. 

Her comment comes on the heels of her concern that this asset class may become reserved for accredited investors. While she noted that there’s no indication from regulators that this was being discussed, historically, riskier asset classes have been blocked off. 

She believes that regulators should focus on making it easier for consumers and retail investors to understand what they’re investing in. For example, this could mean standardizing disclosures by indicating what kind of information needs to be available in a white paper, she said. 

“And that to me is a better use of our regulatory power than cutting off access to large groups of people simply because they don’t have preexisting wealth, which I think is frankly really shameful,” Warren said.