Group Co.
Crypto Confusion, Wall Street Delusion
Traders Magazine Online News, April 24, 2018
After 30+ years of Wall St experience, I took the plunge into crypto last year to start CoinRoutes with my son (his idea & code) to automate crypto trading across exchanges and help investors navigate a fragmented market. As we have progressed, I have been struck by the different perspectives of the crypto community vis a vis “traditional” financial professionals. The title of this article represents my opinion that crypto is here to stay, both as an asset class and as a technology that will improve other asset classes, but that the market and its denizens need to mature.
The “confusion” in the title refers to certain crypto community views that reflect a lack of understanding of financial market principles. Notably the beliefs that “decentralization” is a goal, in and of itself, and that regulation has little real purpose, but rather is a tool of entrenched interests to create barriers to potential competitors. These confused views are troubling, since price discovery requires some method for orders to interact and the crypto markets are immature, lacking basic mechanisms to facilitate pan-market transparency, fair access and investor protection. The “delusion”, however, refers to the view of many financial traditionalists that crypto assets are a bubble destined to go to zero and are only useful as a haven for drug dealers and scammers. The reality, in my opinion, is that crypto-assets will ultimately herald a major step forward in financial markets, with lower transfer costs, democratized access to platforms and an ability to program rules into transparent systems.
This gap in understanding between these perspectives is a problem. The misconceptions of the crypto community coupled with a lack of understanding on the part of “traditional” financial executives, play a large role in explaining why the crypto-markets are immature. Ignoring the luddite views of some in the financial community, there are sufficient opinion leaders, both at banks and at regulators such as the SEC, FINRA, and the CFTC that do appreciate the potential of crypto assets and technology, to help guide the maturation process. For that to occur, however, the crypto-community is going to have to gain a better understanding of how modern market structure evolved and the role of regulation in that evolution.
For more information on related topics, visit the following channels:
Comments (0)