Home Feature Can Southeast Startups Lead in the Crypto and Web 3.0 Space?

Can Southeast Startups Lead in the Crypto and Web 3.0 Space?

by Maija Ehlinger

It started as a 2008 whitepaper on a peer-to-peer electronic cash system. Now blockchain is behind the rise of entirely new creative industries, the changing financial landscape, and even a new iteration of the internet (web 3.0).

Acronyms like NFT, DeFi, and DAOs snuck into the popular lexicon in 2021. Now several industry leaders are making the case that Southeast startups have a unique advantage to lead the space moving forward. 

From financial services and legal services to software, media, music, and art, we believe web3 based decentralized business models will spur innovation in all sectors of our economy,” Paraj Mathur, an investor at Panoramic Ventures, told Hypepotamus. 

Panoramic has made several investments in the web3 and NFT space over the past few months. Several of those have been in their own backyard in Atlanta.

Southeast startups have a long history of building in the space. But new momentum, and new legislation, may set the stage for more regional innovation. 

North Carolina recently passed a new statewide regulatory sandbox program designed specifically to promote entrepreneurs and companies building in the blockchain space. 

Agnes Gambill West, Co-Chair of the North Carolina Blockchain Initiative, describes it as a “safe harbor for experimenting with blockchain innovations related to fintech and insurtech that are at the edge or outside of the existing regulatory framework.” 

The Act also creates an Innovation Council to help make recommendations on blockchain-related initiatives and a reciprocity provision for those building technologies across jurisdictions. 

 

 

North Carolina is a unique place to build blockchain startups, according to Gambill West. Not only does it have a cluster of research universities; it also is home to Montreat College, which is designated as a National Center of Academic Excellence in Cyber Defense Education by the National Security Agency and Department of Homeland Security. The state is also phasing out its corporate income tax starting in the year 2025. 

Tampa and Miami’s tech scenes have become hubs for scaling crypto/blockchain ventures as well. And Atlanta’s FinTech community laid the groundwork for crypto-related companies like BitPay and Bakkt to launch over the last few years.

More recently, Startup School graduate DAOFront raised a $700K pre-seed round to help with bookkeeping for crypto companies and NFT startup GigLabs raised a $4.5 million seed round to help companies jump into the NFT space. 

Mathur sees the move to move web3 as a unique opportunity for the Atlanta startup scene. 

“Atlanta has a massive advantage in the web3 space because of a great combination of culture, commerce, and creativity. Fundamentally, web3 unlocks new media models and business models for internet-based businesses,” he said. “Atlanta is a cultural center of the US, with a thriving pool of phenomenal artists and musicians. You think about Web3 and Blockchain, you think about NFTs — Atlanta has such a prominent art scene — think about the murals, the tiny door project — all this creativity that will quickly expand into the NFT space and instead of reaching a few hundred people a day, reach millions on the internet.” 

 

HOW CAN WE RESPONSIBLY TALK ABOUT CRYPTO? 

It’s no longer just individuals buying bitcoin on Coinbase that is moving the crypto market. VCs poured $33 billion into crypto-related startups in 2021, while heads of states from around the world and regulators worked to figure out how to best harness the space.

So how do we cut through the “hype” and current “VC frenzy” and figure out what crypto trends are here to stay? It will largely depend on what regulators have to say (we’re dealing with securities and derivatives after all). 

“If you had told me in early 2011 when I started focusing on blockchain and digital assets that I would see the Federal Reserve talking about a blockchain-based central bank digital currency, or investment banks working with hedge funds investing in cryptocurrencies, or about [talk of] putting derivatives and other securities products on the blockchain…I would have laughed,” Richard Levin, chair of the FinTech and regulation practice at Nelson Mullins, told Hypepotamus. 

Yet all of those situations are now happening, and Levin sees opportunity.

Levin helps both large firms and early-stage crypto companies alike navigate requirements from Commodity Futures Trading Commission, the Securities Exchange Commission (SEC), and other state and federal agencies. While he’s seen the “push and pull between the energy and dynamism of the entrepreneurs” and regulators, he also notes that “many regulators around the world like blockchain technology and view it as a tool for promoting compliance and for surveillance purposes.”

“Many, including leading banks, believe blockchain technologies will be the backbone of web 3.0. Blockchain has the potential to promote tremendous efficiency. But trying to get traditional industries to completely change overnight is not going to happen, because large institutions have legacy systems, compliance controls, and safety mechanisms, and they have shareholders to answer to. They’re not just going to tear out their systems and replace them with something that’s blockchain-based overnight,” he added.

How Southeast startups navigate that shift could help cement the region as a crypto hub in 2022 and beyond.

 

 

 

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