Updated Jun 14, 2022 - Axios Events

Watch: A conversation on crypto's rise in the investing space

On Tuesday, June 14th in Washington, D.C., Axios business reporter Hope King and business editor Dan Primack led conversations examining the rise of cryptocurrencies in the investing space and how industry stakeholders are adapting to manage them. Guests included Archetype venture partner Katherine Wu, Commodity Futures Trading Commission (CFTC) commissioner Christy Goldsmith Romero and Rep. Darren Soto (D-Fla.).

Katherine Wu discussed the recent volatility surrounding the crypto industry, how the state of the market dictates what types of applications developers build and what she thinks is necessary to make crypto more accessible.

  • On whether crypto is currently in a bear market: “Certainly, I think dealmaking is slowing down. Certainly we’re seeing price corrections. We’re certainly seeing what you call “tourists” kind of leave the industry, and so you’re seeing all the signs of people not being as excited anymore.”
  • On if crypto has become too accessible to ordinary retail investors: “I think there’s a difference between accessibility in terms of ease of use and education, which is the understanding part. I think where we’re lacking is maybe on the education front. I have so many friends and family who come to me, they’re like…I’m really curious but I’m so scared and I have no idea where to look, I don’t know what sources are valid, I don’t know who I can trust. So I think the education piece is huge.”

Christy Goldsmith Romero explained the regulatory gaps in the crypto industry, what proposed crypto legislation efforts are aiming to achieve and the differences between CFTC and SEC oversight over the crypto market.

  • On how increased regulation would impact crypto investors and customers: “There’s not a lot of financial institutions invested in cryptocurrency, and a lot of them come in and tell me we’re waiting for a regulatory framework, more regulation. So to the extent that happens, they become more invested. There’s going to be a lot more interconnections, a lot more interdependence, but then there’s also going to be a lot more customer protections, a lot more guardrails. So when I look at this, my biggest concern is that if regulation fails to keep pace with technology, the most vulnerable people are going to be hurt.”
  • On proposed crypto legislation: “I am certainly of the opinion that I would like Congress to act to close the regulatory gap and give the CFTC greater authority beyond our anti-fraud authority into the spot market, so I’m very appreciative of Senators Lummis and Gillibrand…”

Rep. Darren Soto illustrated how he balances promoting innovation while protecting consumers, why existing laws do not work to regulate evolving assets like crypto and what the “light touch” regulation the Congressional Blockchain Caucus speaks of looks like in practice.

  • On updating existing laws to regulate cryptocurrency: “Our job is to pass new laws to evolve to what society has. In the case of cryptocurrency, it could be one of four different types of archaic assets that are being discussed by Chair Gensler. It could be a commodity, it could be a security, it could be a currency, it even can be a future. So trying to fit it into 20th century boxes just doesn’t work, and it isn’t working right now.”
  • On light touch regulation: “It starts with defining jurisdictions so that we don’t have agency overlap. It also makes sure that we’re starting with basic rules of the road like we did for the internet back in the late ‘90s, early 2000s…we just want to make sure we have guardrails for the most blatant frauds that you could see…”

In the View from the Top segment, Grayscale CEO Michael Sonnenshein shared one big industry trend he’s watching in the second half of this year.

  • “I think it would have to be plumbing. And when I say plumbing, I’m talking about infrastructure in and around crypto assets. The continued development of order management systems, indices, tax lot reporting, these are all those critical elements that have now been built out, and when we see those begin to get connected to the legacy financial system, it’s going to unlock a lot more investors and a lot more value.”

Thank you Grayscale for sponsoring this event.

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