By Stoyan Kenderov, COO, Plastiq

In financial services, that which is uncontrolled runs amok. The year 2022 for crypto is a case in point. First we had the Luna and TerraUSD crash, complete with bankruptcies and arrest warrants. High-profile crypto entities like Three Arrows Capital, Celsius and Voyager collapsed. Then came FTX and its toxic little brother Alameda Research. In hindsight, shouldn’t we have suspected this would become the most epic financial collapse since 08’? The crypto-skeptic crowd might say, yes. Thousands of investors lost their savings, and politicians cried out for regulation. A slew of founders and CEOs of crypto firms were arrested or charged in 2022.

Despite this raucous year, many enthusiasts continue to rally. While we may see a future where crypto is less volatile and more tangible, today it remains a speculative asset. It’s very poorly regulated, evidently hackable, and subject to risks that are hard to assess.

There are two clear issues crypto faces today: a lack of transparency and lack of accountability. These are qualities many in the digital banking and fintech world have earned through hard work. We have gone through the regulatory steps to establish a relationship with the government so our industry can thrive, while providing protections for consumers and investors.And this brings to my main point. Crypto has a ways to go to meet the safety and accountability standards that the public demands. Without that, it will continue to go through boom and bust cycles, where a select few benefit at the expense of the masses.But getting there will take time. It won’t be easy. There will be pain. But it can be done. Crypto just needs to take a few pages from our playbook. Here are a few key lessons we’ve learned over the years.

Get ahead of regulation to assure future support

When launching a new financial product, it’s important to be proactive about compliance even if regulation is not complete or doesn’t yet exist. Don’t just assume the regulators are going to watch from the sidelines. If there is any doubt about the nature of the product—registered security, credit, or depository operation—engage with regulators early to get their perspective and avoid later adversary actions.

An open dialogue, early on, helps newcomers navigate the evolving regulatory landscape and can do a lot to keep company founders out of courtrooms or handcuffs.

Partner with established institutions to build trust

Look for the right allies. Undeniably, crypto is disrupting what many in the traditional financial industry are doing, but it’s inevitable that we will all need to work together. Practically speaking, there is a huge advantage to working with bigger, more established entities. They have large teams dedicated to keeping products and operations compliant in many jurisdictions. Bank partnerships are a prime example. While many crypto enthusiasts see banks as a “necessary evil”, they can provide a path to long-term success and robustness. They can fast-track product adoption and help create new business models. This will be key to building a robust crypto infrastructure and bringing the entire industry into the mainstream.

Be transparent and accountable from day one

The crypto space is vast and complex. There are coins dropping everywhere, and an ecosystem of fragmented applications to trade on. There aren’t many go-to resources for clarity. It’s tough for the average consumer to navigate.

There is this notion in the crypto industry that clear customer disclosures and transparency of product terms and conditions contradict and stifle innovation and acquisition efforts. That’s just not true. Establishing transparency and a code of ethics are essential to building trust with clients, to constrain potential legal actions against your company, and to prevent devastating collapses. Imagine if FTX had published and been compelled to follow a set of rules such as, “We will act as a responsible fiduciary, and not lend your assets to a speculative company to invest in a product we happen to make.” We’d be having a very different conversation about FTX today.

Build for the consumer, not just developers

The world of crypto infrastructure is technical and user-unfriendly; most applications are built by developers for developers. As a result, the consumer-user experience lags far behind the examples set by the fintech industry. Cumbersome interfaces and application fragmentation open the door to user mistakes and fraud.

Crypto industry entities can follow the lead of successful fintech companies that delivered simple, intuitive, and accessible products and services which met the needs of consumers. Even today, few exchanges make it easy and safe for people to buy, sell, and use cryptocurrencies. Here’s a goal to aim for: make transacting in crypto as straightforward and secure as using Venmo, PayPal or Zelle.

There is potential, but also tons of work ahead

For a service that has yet to find its true purpose, and has suffered a loss of trust, crypto is remarkably resilient. But imagine crypto’s potential if it could find a mission beyond being a speculative investment? Imagine if the industry could overcome its shortcomings in compliance, infrastructure, transparency, and user experience? Those would be significant advances. When combined with partnerships with established financial services leaders, crypto’s familiar cycle of reckless enthusiasm and despair could be replaced with justifiable trust and a stable role in the economy.