SWITZERLAND — What looks like a fluffy panda bear wearing bright red boots? Anthony Scaramucci on a crypto sales pitch in Davos.

Donald Trump’s infamous former communications director is here in the Swiss Alps to save his bacon — after Sam Bankman-Fried, the now-indicted former head of FTX, invested nearly $45 million in Scaramucci’s Skybridge Capital before the exchange collapsed.

You might think Scaramucci would feel burned, but in fact he’s still firmly on the crypto side of one of the most interesting arguments percolating here in Davos, as the power elite meet, drink, pontificate and dodge protesters in the snow.

The argument is: Who’s right about the future of finance?

Scaramucci is doubling down on crypto just as JP Morgan’s Jamie Dimon tours the Davos studios labeling the sector a fraud. The European Union’s finance commissioner, Mairead McGuinness, said here that “crypto is like a religion” that she would rather remain agnostic on.

The Mooch vs. JP Morgan might not exactly seem like a fair fight, but actually Scaramucci is an institution in Davos: He holds court in hotel lobbies, will talk to anyone who stops him in the street, whether you’re wearing a fur coat and pink cowboy hat, or a gray suit. He hands out 100-point red wines at one of the week’s most sought-after parties.

His way of pushing back on crypto skeptics is accusing them of “not trusting people.” (Which is a bit ironic, considering that crypto itself is built as a “trustless system.”)

A common refrain among the Davos crypto set is that fraudsters are the problem, not the underlying technology, or the lack of regulation around it.

Scaramucci is simply the most infamous of the Davos crypto junkies. Executives and staffers from high-profile exchanges, intermediates and tech companies are everywhere here, trying to convince the 0.1 percent that everything is just fine.

Some concede the need for regulation, but the corridor chatter is all about how onerous those rules will be, rather than how they’re needed to save the sector from itself.

In a global sense, crypto isn’t just a finance story, but an energy and sustainability story as well. Some crypto systems can use 5 million times more energy than others — another reason why the sector is attracting the attention of regulators. While some companies use their relative greenness as a marketing opportunity, the worst climate offenders don’t even have a plan to change.

McGuinness thinks it’s time for targeted rules. If this crypto crash wasn’t big enough to wreck the global financial system, the next one could be, she thinks, “and we don't want to see that.”

But if crypto interests want to shape or fight those rules, the takeaway from Davos this year is that they’ll need to get more organized.

This week they’re more likely to talk about “trustless trust” or “building the internet of everyone,” as they hand you an espresso martini shaken with locally sourced organic ingredients, than to lay out a serious policy case against those who want to clamp down on the sector.

You will drink that martini on chairs with faux antlers as legs, looking at carved wood walls with indigenous motifs in a container-like structure that exists only for this week, all built just for people like you by a decentralized network/protocol/marketplace called Filecoin. That container is only here because the church it is attached to is not big enough for Filecoin’s ambitions — which need not merely a blockchain shrine, but an entire pop-up cathedral.

If you’re lucky, Princess Sophia Wolkonsky of Castillia may approach you to thank you “for the great energy you have.” And if all else fails, The Mooch is always happy to hang out.

In the continuing, acronym- and abbreviation-filled saga of the U.S. and EU trying to get on the same page re: AI — the two sides have a big, ongoing conversation on the horizon, as POLITICO’s Mark Scott writes in this morning’s Digital Bridge.

The split Mark points out is quite simple: When it comes to getting on the same page with regard to the technical standards that will smooth global trade and connectivity, everything is (for the most part) peachy. But U.S. and EU representatives haven’t yet seriously engaged with how to determine the actual values that inform their approach to AI regulation, as reflected by the very different philosophies of the U.S.’ blueprint for an AI Bill of Rights, which is a list of recommendations and incentives for industry, and the EU’s AI Act, which is backed by the force of statute.

“That tension needs to be resolved if transatlantic cooperation on AI is to move forward,” Mark writes. “...If there are ongoing clashes about what values (e.g. attitudes on AI-driven autonomous weapons) [are] underpinning those [technical] standards, you’re inevitably building a transatlantic playbook on shaky ground. You’ve been warned.” — Derek Robertson

Has True DeFi never been tried? Is it even possible?

A panel hosted by the Cato Institute today titled “Differentiating DeFi: Understanding Efforts to Regulate Decentralized Finance” tried (implicitly) to answer those questions — and, crucially, what they mean for impending efforts to regulate the sector.

Featuring finance and crypto policy wonks from Cato, WilmerHale and the Crypto Council for Innovation, the speakers attempted to draw a line dividing platforms like FTX, the flaws of which according to DeFi boosters lay in how overly centralized it was, and a theoretical positive alternative that would allow users to move digital cash securely in a truly “trustless” system.

“[Regulations are] based on there being a person, or group of persons, to whom the obligations to comply with the law apply,” said WilmerHale’s Tiffany Smith. “There are a lot of quotes when regulators talk and they’re calling [crypto platforms] decentralized, but there's someone who effectively has control versus getting to the opposite extreme where it's truly decentralized, and you’ve got a governance mechanism that gives all the token holders the ability to make decisions.” — Derek Robertson

• After ChatGPT, professors are having to rethink their whole approach to pedagogy.
• Finance veteran Barry Silber took a skeptical view on crypto… and still got crushed.
• AI-powered bots are wreaking havoc on a popular video game.
• Sam Altman to the world on GPT-4: You will be disappointed.
• How are those metaverse work meetings actually going?

Stay in touch with the whole team: Ben Schreckinger ([email protected]); Derek Robertson ([email protected]); Steve Heuser ([email protected]); and Benton Ives ([email protected]). Follow us @DigitalFuture on Twitter.

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