NOVOGRATZ: Crypto Adoption Needs Regulatory Clarity And Institutional Acceptance To Go Mainstream

Mike Novogratz is both a crypto paragon and a Wall Street insider. He’s been in both camps over the course of his career. Now famous for his 2017 Bitcoin and Ethereum price calls (that were significantly exceeded, even though some called him crazy at the time) he’s been making the rounds at crypto conferences across the globe discussing digital asset adoption and where the industry could go next.

His current thesis sounds something like this, speaking at the Beyond Blocks conference in South Korea: “You won’t see mass adoption until the user experience does not feel like something new and that is still five to six years away.”

Novogratz explained that one of the major obstacles on the way to widespread adoption is the increasing “cost of technical talent” as well as the doubts of conventional investors, which are aggravated by “no clear precedent for the financial industry”: “Think about how institutional investors operate. It’s hard to tell your boss ‘I have money in places you have never heard of.’ You need a trusted, name custodian — a Japanese bank or HSBC or ICE or Goldman Sachs — to allow institutional investors to feel comfortable.”

The investment banker noted the importance of due diligence and proper regulation across a multiplicity of governments, as well as urging the mainstream public to get into blockchain and crypto, adding that it is not necessary for users to understand the tech in detail.

Novogratz further clarified stating that mass adoption would find its way to the masses once standard bearer institutions had adopted cryptocurrency standards and practices: “Think about how institutional investors operate. It’s hard to tell your boss ‘I have money in places you have never heard of.’ You need a trusted, name custodian — a Japanese bank or HSBC or ICE or Goldman Sachs — to allow institutional investors to feel comfortable.”

These comments aren’t a surprise as the likes of Novogratz and Tyler and Cameron Winklevoss continue to work with governments and larger institutions to adopt some level of standardized regulations.

The regulatory hurdles remain somewhat steep and are the chief concern of some of the largest crypto funds and firms anticipating joining the fray.

One notable ray of light is the SEC adding digital assets to its 2019 priorities for review and, presumably, action. Of course, the current US government shutdown isn’t helping them speed up the process.

Whether or not standardized regulations would lead to higher prices for cryptos is a completely separate discussion. As it stands, and as Novogratz postulated, we are several years away from both global regulation and institutional adoption.