The Big 4’s Tax Problem

In an attempt to salvage what remains, big players like Sam Bankman-Fried, the founder of the FTX exchange, are swooping in with emergency infusions of capital for companies like the crypto lender BlockFi.

It looks as though a major consolidation is in the works, so DealBook asked veterans of previous tech bubbles what we’ll see in the coming months. They expect more pain — as well as new government policies — as the sector shakes out.

“There is a great parsing taking place,” said Chris Lehane, the chief strategy officer of the crypto venture firm Haun Ventures and a former Airbnb executive. The crash will separate the short-termers from the more committed players, he said, and distinguish between “builders and bandwagoners.” That urgency, he said, could accelerate much-needed policy solutions: “Regulations are part of the parsing.”

A few big players could significantly expand their influence, said Jeremy Allaire, a founder and the C.E.O. of the stablecoin issuer Circle, who took two companies public before blockchain was a big thing. Allaire said he expected his company as well as the exchanges Binance, Coinbase and FTX to thrive and advance the development of new rules for the industry.

Allaire and Lehane see shades of crises past in today’s markets but are dubious that crypto will end up as centralized as the internet did after the dot-com crash — as long as policy is done right. Still, there are already signs that there might be giants emerging.

What’s up for grabs? Tomorrow’s customers, among other things. FTX’s Bankman-Fried, in the recent industry cleanup, says he steps in where businesses have customers to protect, which also helps maintain market integrity. In recent credit agreements with Voyager Digital and BlockFi, his businesses subordinated their debt to that of customers’ — a brand-building gesture that arguably helps advance his ambitions to win fans and dominate crypto regardless of whether the underlying companies survive.