FTX's Sam Bankman-Fried says crypto adoption by institutions is more of a trickle than a deluge because regulators are keeping them waiting
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- Crypto institutional adoption has been more of a trickle than a deluge so far, Sam Bankman-Fried said.
- Companies are slow-moving and tend to be methodical, the FTX boss told Yahoo Finance Tuesday.
- Most are waiting for more regulatory clarity before they feel comfortable diving in, he added.
Crypto exchange boss Sam Bankman-Fried is calling for digital asset regulation again, saying institutions have been slow to embrace cryptocurrency investments as most feel regulatory certainty in the industry is crucial.
"We've definitely seen institutions start to get involved in the space," the CEO of FTX told Yahoo Finance in a Tuesday interview. "But it's been much more of a trickle than a deluge so far."
Cryptocurrencies have been at the center of attention over the course of the pandemic, adding billions of dollars in market value as some big-name institutions like JPMorgan, Goldman Sachs, and Fidelity joined in the past two years.
Industry advocates say participation from institutions will help the market avoid the serious price drops and fading interest that were seen in the "crypto winter" of 2018, which saw bitcoin tumble more than 84% from its then all-time high.
But Bankman-Fried's comments suggest the current crypto trend, atleast among institutions, looks bearish as companies want to ensure having a concrete plan before making snap decisions in a volatile market.
"We haven't seen sort of mass institutional inflows in the way that I think some people are anticipating," the crypto billionaire said. "And I think a lot of the reason for that is that, first of all, these tend to be slow-moving companies."
"These are just companies that are always going to be methodical about how they enter. But in addition to that, I think that there are a lot more waiting for more regulatory clarity before they feel comfortable diving in," he added.
While regulators recognize the growing mainstream interest in digital assets, they have been cool on the sector, citing the risk of scams among other issues.
Last week, global watchdog the Financial Stability Board said "ongoing vigilance" of institutional investors' involvement in crypto markets is needed, saying links between the two might end up triggering a financial crisis.
Even in the absence of regulation, the lack of macro certainty doesn't make it any easier for institutions to have a solid directional view. That might be another reason for institutions to wait it out.
"Those are, I think, the two biggest things that we're seeing sort of institutions on the lookout for in order for them to feel more comfortable making sort of a bigger imprint in this space that they have so far," Bankman-Fried said.
The FTX boss seems to agree with "Shark Tank" investor Kevin O'Leary, who said last week that bitcoin can double or triple in price only when institutions are comfortable buying it.
President Joe Biden's administration is expected to issue an executive order on cryptocurrencies this week as a matter of "national security."
Some concerns likely to be highlighted in the directive are bitcoin's impact on the US dollar as a global reserve currency, difficulty in tracking wealth for tax purposes, and bitcoin's use in ransomware.
Given that many in positions of power in the government have conflicting views on cryptocurrencies, analysts expect the US Congress will take a while before it passes legislation.
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