Coinbase’s Armstrong and ARK Invest’s Wood Talk Crypto

5/10/2022

Tech

0 min read



Image: Brian Armstrong, Cathie Wood (Milken Institute)

ARK’s Cathie Wood and Coinbase’s Brian Armstrong Talk About Crypto’s Outlook

ARK Invest’s founder and CEO took part in a panel discussion titled, Conversations with Crypto Pioneers. The discussion was held at the Milken Institute’s 2022 Global Conference and included Brian Armstrong who is the CEO and co-founder of Coinbase (COIN). When it comes to Bitcoin and other cryptos, both CEOs are strong advocates. What Ms. Wood and Mr. Armstrong had to share ought to be of great interest to investors whose wallets have shrunk with the recent weakness in this asset class.

According to Armstrong one billion people around the world will use cryptocurrency technology in one way or another by the end of the 2020s. Crypto has started to enter the mainstream over the past few years. Armstrong said, about 200 million people worldwide have used crypto. Institutional investors are increasingly embracing digital currencies in their portfolios, and some retirement savers may soon see Bitcoin as an option in their 401(k) plans.

Wood believes the rate of crypto adoption in the U.S. is slow because of regulatory uncertainty; she said, “I would’ve expected more clarity,” and added. “Basically we’ve come at this from a negative point of view, and I’ve seen other countries come at it from a positive point of view. If we’re not lucky, regulatory arbitrage is going to take the market away from us.”

“This is a new asset class, and you have to have a point of view,” Wood said.

Armstrong seems at odds with the official point of view of regulators and others in Washington. He’s not overly optimistic, noting a recent executive order from President Biden that calls for protections from the crypto industry’s potential innovations. And last month, the White House outlined a national policy to address the risks and benefits of digital assets and their underlying technology.

Securities and Exchange Commission (SEC) Chairman Gary Gensler has been cautious when it comes to regulating cryptos. He has said that many tokens traded on crypto exchanges are likely securities. As securities, they would require more disclosures from both the tokens as well as the platforms that are not now registered security exchanges. Coinbase is a cryptocurrency exchange.

“I think this is a very bipartisan issue,” said Armstrong, “The majority of people I met with in Congress, 50% or more, are now pro-crypto, they believe that this is a net good for society.” About one in five Americans have now used crypto or tried it in some way, Armstrong said, and the number is growing quickly. “That’s a massive voting group. It’s quickly becoming very politically unpopular to be anti-crypto,” according to Armstrong.

Both CEOs noted the application of blockchain technology in everyday life goes well beyond digital coins.

The Coinbase CEO sees use cases for the technology in social media. He was asked about his view on Elon Musk’s takeover of Twitter, to which he said the company has a huge opportunity to become a leader in decentralized social media, where users’ online identity and content aren’t owned by one particular platform, but by users themselves through a decentralized ledger. It would mean anyone could use all the information on Twitter and display it in various ways. “Essentially, it democratized access to [social-media content], and I think that’s one of the directions Twitter could go,” Armstrong said. “I imagine that there are a number of startups and other companies that will be building competing decentralized social media products if [Twitter doesn’t.]”

Both Armstrong and Wood agree crypto and blockchain technology could spur growth around the world over the next decade. The world will see a substantial portion of GDP coming from the crypto economy in 10 to 20 years, similar to e-commerce, the two agreed. “People think they might have missed the opportunity when they see Bitcoin at $70,000, but we are in fairly early days,” Wood advised.

With recent moves in financial assets, particularly crypto, those that held since last year are hurting. Bitcoin prices are down 20% year to date and 40% below their peak reached in November 2021. ARK Invest’s CEO who’s funds own crypto and crypto-related assets, was an early investor in digital assets and blockchain technology. Coinbase is the fifth-largest holding of the ARK Innovation exchange-traded fund (ARKK), the company’s flagship product.

Paul Hoffman

Managing Editor, Channelchek

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