Shark Tank investor Kevin O’Leary says regulatory clarity will allow institutional capital to flow into the crypto markets.
In a new interview with Kitco News, O’Leary discusses US Senator Lummis and Senator Gillibrand’s latest proposal for a crypto regulatory framework.
“I’m coming to the conclusion, particularly after the feedback from the institutions here at the [Bitcoin 2022] conference, [that we] will take any regulations. Give us anything. I mean, we’re going to make the assumption, because it’s bipartisan and they’ve taken so much input from the industry, that we’ll get something that’s workable.
It may not be perfect, but the reason you care, as an investor, the reason would want Lummis to be successful… Is that the institutional capital is like a giant dam, a wall of money, that can’t invest yet. So it’s a spigot of capital in the trillions of dollars – not a dime of it has been put into crypto yet. Can you imagine what would happen to asset values if they started to allocate? That’s the investment there.”
While there has been talk of institutional interest in the crypto markets, O’Leary says that relatively speaking, there has been “practically zero.” He says regulators need to give the big investors the greenlight before their capital starts flowing in.
“We’re not even in the game yet. When you talk to sovereign wealth and large pension – nothing. Primarily, it’s private wealth, family wealth, it’s hedge funds, it’s certain smaller institutions that used to buy the publicly traded shares of Bitcoin miners but now they’re worried about the carbon audit issue. I don’t see it yet. What we really need is the SEC and US regulators and then the allocations will start, primarily in Bitcoin.”
When asked what needs to happen for institutions to get the regulatory clarity they want to invest, O’Leary answers,
“The easiest way to do it would be to do what the Canadians did and simply allows the first American traded Bitcoin ETF. It could be purchased as a security into mandates that are already set up to purchase securities like shares. Because they don’t have to buy Bitcoin, they don’t have to set up a separate wallet – they could simply say, ‘Okay, here is a true ETF with the underlying actual Bitcoin, and we can simply allocate 50 basis points to $100 billion mandate – we can buy the ETF.’ That would be the easiest path to take.
My guess is they’re not going to allow it – there are multiple applications for that ETF, of which none have been granted… It doesn’t matter which one actually gets licensed because there’ll be 10 more that come immediately. But we’re going to need an order from the regulator to allow institutions to be compliant when they buy Bitcoin itself.”
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