A leading law firm partner and intellectual property specialist has warned that a major cryptocurrency crash could have a knock-on effect on people’s willingness to invest in the FinTech sector.
Susan Hall is partner and head of technology at national law firm Clarke Willmott, where she specialises in working with clients ranging from government departments and universities to multinationals, owner-managed businesses and start-ups.
Hall has worked on major IT outsourcing projects, cloud computing agreements, intellectual property work and patent licensing and disputes, among others.
Speaking to BusinessCloud at Pro-Manchester’s FinTech Lunch event last week, Hall predicted that a cryptocurrency crash could happen in the next 12 months.
“My worry is that there is going to be a major cryptocurrency crash which will lead to a lot of people losing a lot of money,” she said.
“And that will have a knock-on, depressing effect on people’s willingness to invest in other blockchain-based technologies and by extension, quite conceivably, anything with the FinTech label more generally.
“After the dot-com crash, you could not get anybody to invest in IT for businesses for love nor money… because of that negative association.”
A senior solicitor and business crime specialist last week warned that cryptocurrencies may face a struggle to regain credibility.
Hall believes there has been “a great deal too much hype” around cryptocurrencies – and that headlines about Bitcoin millionaires are only adding fuel to the fire.
“There’s far too much positivity and hype about it,” she said.
“You’ve got a situation where a lot of people are caught up in speculation, and with all speculation the key moment is when to step out of it.
“It has a value because people attribute a value to it. It’s a parasitic structure in a sense, because people are putting value into the system, but that value comes from other different currencies.
“How would it self-sustain? If you had nothing but cryptocurrencies how would that economy work?”
Although many experts and crypto enthusiasts would welcome more regulation into the ‘sector’, Hall says that a crash could be the only thing to slow it down.
“Even with conventional currencies it’s very, very difficult because the tools people have are very crude,” she said. “To keep inflation down you slash interest rates, and when they’re slashed to the bone, then what?
“Macro-economic tools are pretty crude at the best of times, but with this particular bubble, what could you really use to slow it down except a crash? The one thing you’d hope to get is a relatively managed crash.
“It’s difficult to see how you would deflate it… unless people just get bored and start widening their investment strategies.”
Pro-Manchester’s FinTech Lunch event was hosted by PwC partner and Lord Mayor of London Charles Bowman.
Hall spoke at the event alongside Lloyd Hutchinson, head of sales at Ebury; Sonia Awan, head of digital innovation at Together; Lewis James, co-founder and chief operating officer at AlgoLib; and Matthew Elliot, co-founder and CDO, Nivo.