Allocators are unlikely to adopt cryptocurrencies as part of their portfolios until regulators provide specific guidance, according to Cathie Wood, who says institutional adoption has been “rather slow.”
In a panel at the 2022 Milken Institute Global Conference on Monday, Wood, the chief executive officer and chief investment officer of ARK Invest, sat alongside Brian Armstrong, CEO and co-founder of Coinbase, to discuss the latest trends in crypto and blockchain technology. Armstrong sang the praises of institutional adoption of crypto, but when moderator Michael Piwowar, executive director of the Milken Institute Center for Financial Markets, asked Wood to comment, she said that institutions are far behind retail investors when it comes to digital assets.
“Institutions are going to have to start playing ball,” Wood said.
Right now, institutional investors don’t feel like they have enough regulatory guidance to dive head-first into digital assets, Wood said. When asked to describe the current state of crypto regulation in the U.S., Wood said she “would’ve expected more clarity” by this point.
According to Wood, the Securities and Exchange Commission has approached the asset class with a wholly negative attitude, with policies that are more about preventing wrong-doing than than spurring innovation. This has not been the case in other countries, like China, that have been more willing to embrace cryptocurrency, Wood said.
She said this dynamic could eventually encourage innovation in America. “In the U.S., we have these competitive instincts,” Wood said. “I like the fact that other places are pushing the U.S.”
Both Wood and Armstrong agreed that there is demand for regulation, but that it needs to strike the right balance to encourage crypto development. Armstrong said he hopes impending regulation emulates the beginnings of the internet, when regulation created structure without hindering innovation.
There’s one good sign for crypto advocates, according to Armstrong. He said it is becoming “politically unpopular to be anti-crypto” in Washington D.C.
