Mike Novogratz believes it’s only a matter of time before big corporate actors start embracing digital assets.
While the number of institutions adopting cryptocurrencies into their business models is increasing, the number of companies that have not yet done so is quite high. Novogratz attributes his indecision to enter the digital currency industry to the extreme volatility of the market.
He stated that the liquidity in the cryptocurrency world is motivated by what he calls “a huge community of gamblers around the world.” He even made a comparison between the market and the casino. Novogratz believes that institutions will turn the industry into a beehive if the regulatory concerns surrounding digital currencies are taken more seriously.
What keeps institutions away from crypto?
One of the regulatory concerns that keeps many institutions away from crypto is the lack of complete transparency as they don’t know exactly who they’re dealing with. Businesses naturally want to know who they do business with and avoid dealing with what might be considered undesirable. Novogratz uses North Korea, Iran and Hamas as prime examples of entities that most of the world wants to avoid doing any business with.
Novogratz believes that the Know Your Customer authentication process should be implemented so that institutions can feel more secure when operating in the gray area of crypto. The process, already in use in places like Thailand, would protect institutions from “accidentally” doing business with organizations that could get them in trouble with government regulators.
Novogratz thinks increased transparency will be the catalyst for DeFi entry
“As soon as the issues are resolved, you will see decentralized finance institutionally adopted,” Novogratz asserts.
Galaxy Investment Partners CEO believes a solution is on the horizon. He states that he is working on a number of different projects that aim to “improve the compliance and verification process for institutions investing in crypto.”
Despite advances in global adoption, he estimates that only 20% of the global crypto market is held by institutions and the other 80% is held by individual investors.