- Crypto heavyweights gathered at Messari's three-day Mainnet conference in New York this week.
- Galaxy Digital's Mike Novogratz and Robinhood Crypto's Christine Brown were among the key speakers.
- They discussed the regulatory risks for the industry and exciting opportunities on their radars.
- See more stories on Insider's business page .
It was all about regulation in crypto land this week.
First came news of Binance, the largest crypto exchange in the world, being investigated for insider trading by regulators including the Commodity Futures Trading Commission. Then Coinbase scrapped its plan to launch a crypto lending program after a spat with the US Securities and Exchange Commission.
In a Tuesday interview with the Washington Post, SEC chairman Gary Gensler said the crypto industry was "rife with fraud and abuse and hucksters and the like" and likened stablecoins to "poker chips." Ending the week on an even darker note, China declared all crypto transactions illegal on Friday and banned foreign exchanges from providing services to Chinese residents.
The event took place even as rumors swirled that one of the speakers was allegedly served a subpoena by the SEC onsite, prompting Messari founder Ryan Selkis to tweet out that he "decided to run for Senate."
'A really volatile 6 to 12 months in the regulatory sphere'
"I think it's going to be a really volatile six to 12 months in the regulatory sphere," billionaire investor Mike Novogratz said during a panel with Mike Belshe, CEO of BitGo, which was acquired by Novogratz's Galaxy Digital in the industry's first billion-dollar deal.
Novogratz thinks the crypto community "did a terrible job of educating Washington on what our industry was and what's important" and "this is going to be a really challenging year" as a result.
He added that Galaxy is in the midst of hiring someone in DC to educate senators and congressmen, and even to work with the people at the different regulatory agencies.
What got one of the senators to listen, he recalled, was saying that "our combined company will be close to 500 people with an average salary of over $200,000. Those are all jobs that didn't exist a few years ago."
While Novogratz believes that the onus is on the crypto community to educate the regulators, Coinbase's chief operating officer Emilie Choi thinks there should be more transparency, clarity, and fairness to the way things are being regulated.
In a tweetstorm on September 7, Coinbase CEO Brian Armstrong called the SEC's behavior "sketchy" after the agency said it would sue if the firm launches its lending product, which the SEC considers a security.
Choi explained that Coinbase, which is being overseen by more than 50 regulators, can handle regulatory actions like that because it has a huge legal team.
"If we're struggling with this, then what is your audience going to be able to do," she said in a fireside chat with Messari founder Selkis. "That's part of the reason that we felt the need to be a little bit more public about this."
A new generation of traders and investors
Aside from the regulatory pressures, the big news at the conference is Robinhood's announced launch of a crypto wallet early next year.
Right now, Robinhood users can trade cryptocurrencies for price exposure, but a crypto wallet will allow them to actually use their holdings and move them in and out of the app to purchase digital assets such as NFTs, for example.
Robinhood Crypto's Chief Operating Officer Christine Brown said the expected offering is not about competition but more about "expanding the pie."
"Robinhood, by offering equities, options, a cash management program, and crypto all side by side, it's something that people who want to get into crypto for the first time, can say okay, all my investments are in one place," she said in a panel with Robinhood Crypto's Chief Technology Officer Johann Kerbrat. "So I think it's more about expanding access to the market and bringing new people in."
Robinhood has had two breakout years since the pandemic induced a stay-at-home trading frenzy. The firm is also a pioneer of zero-commission trading and makes the majority of its revenues from payment for order flow.
"We also don't charge commissions," Brown said. "The fact that in crypto people are still charging commissions on trading fees, that's insane."
Staking and crypto ETFs
In the crypto-native world, Coinbase still derives the lion's share of its revenues from trading , but Choi said the firm is invested in ramping up its staking capabilities as ethereum 2.0 is showing a lot of promise.
"We are super bullish on ETH 2.0, we are super bullish on staking being a very big part of the next frontier for crypto," she said, "and that's why we're spending so much time and resource on it."
Robinhood's Kerbrat is also excited about staking . "When we are talking about the inflation rising and saving accounts not really producing any yield, I think staking could be something very interesting for a lot of people," he said, "so personally I'm really excited about staking."
For Novogratz and Belshe, crypto ETFs could also help bring more investors into the space. A regulatory filing this week confirmed that Galaxy Digital has partnered with Invesco to launch crypto ETFs once the SEC approves.
"The ETF is going to turn out to be an easy way for people to jump in and get started," Belshe said, "... it's making it accessible to the world. Ubiquity is what's going to allow us to get to the next level, it's going to drop down the volatility, increase the ability to have use cases that work for the future."