NEW YORK - More regulation in the cryptocurrency space is needed to help institutional investors become more comfortable with digital assets and have the growing asset class really take off, said Mike Novogratz, founder of crypto investment firm Galaxy Digital on Wednesday.
We need regulation, he said at a conference held by Piper Sandler. This is an unpopular opinion in crypto circles, but if you want to do institutions become involved in the revolution, you will need some regulation.
In April, Bitcoin, the largest cryptocurrency, lost close to $110,000 but was ever up to 50 per cent. It was worth changing it for the better or to accelerate it.
Gary Gensler, who had taught a course on blockchain - the technology that underpin Bitcoin - at the Massachusetts Institute of Technology, has said that he wants to see more regulation around cryptocurrency exchanges.
The more clarity around cryptocurrencies, the better, said Novogratz, a former hedge fund manager at Fortress Investment Group and Goldman Sachs partner.
We have a lot of non-bank banks in the space that if I were the head of the SEC, I would regulate, he said. They take in deposits, they have enormous leverage, they have an asset-liability mismatch.
He has also said he would like to see the approval of a bitcoin exchange-traded fund and for the SEC to create a regulatory sandbox - a test ground for business models not protected by current regulation - where smaller companies could experiment with initial coin offerings or fundraising.
The SEC has taken the position that initial coin offerings are securities offers and therefore subject to the agency’s offering rules, which require companies to file registration and disclosure documents.
They do this by litigation, Novogratz said of the SEC, and that's not a great way to regulate and so my pitch would be clarity, clarity, clarity.