In brief

  • Ross Gerber, Meltem Demirors, and Dan Barile chatted about institutional investment at Ethereal Summit.
  • Gerber said the worries some conservative investors have about cryptocurrency's risks are overblown.
  • Demirors wants the "separation of money and state."

At today’s Ethereal Virtual Summit powered by Decrypt, one of the biggest new entrants to Bitcoin investing and a veteran Bitcoin investor put their fingers on why some institutions and retail investors have been slow to adopt cryptocurrency: It's hard to break the dollar habit.

Ross Gerber, CEO of wealth management firm Gerber Kawasaki, which announced in March it would help clients buy and manage crypto via Gemini, said that trust in the almighty dollar—and fear of crypto as risky—is misplaced. In response to a question about conservative investors who fear Bitcoin investing because it's not insured by the Federal Deposit Insurance Corporation (FDIC), Gerber went off.

"The FDIC went bankrupt in the financial crisis," said Gerber. "The FDIC doesn't exist. That's a fucking fantasy. Rule number one: Any promise the U.S. government makes is a fantasy. We don't have any money, we have a trillion in debt. So if the banks go under, if JP Morgan goes under, FDIC covers 0% of it. We saw this happen. It's just a fallacy. The banks are the worst-run institutions in America. To think that that's some level of safety with your money is the biggest fallacy I've ever heard."

Gerber was referring to when the FDIC became insolvent following the 2008-2009 global financial crisis. Though it did not technically go bankrupt, it was forced to place a one-time fee on banks to cover its losses.

CoinShares CSO Meltem Demirors, the veteran Bitcoiner on the panel, which also included Dan Barile of Anthony Scaramucci's SkyBridge Capital, seized on Gerber's point to make a larger one that government control of money should be re-thought.

"What Bitcoin is enabling, cryptocurrencies are enabling, is the separation of money and state," she said. "What we're trying to do is a really challenging cultural and social paradigm shift that's just going to take a long time for people to internalize because change is really really hard. It's really really hard for humans to incorporate new information."

Gerber said such a separation is an idea that's come full-circle. "Ironically, money started as gold, and it was stateless when it started," he said. "The US dollar was really Bitcoin in 1780. So if you would have asked the British what they thought of the US dollar in 1775, they would have said, 'It's fucking Bitcoin.' Rebels printing their own money!"

The panel represented a coming together of two different types of institutional investor (a term Demirors said should be redefined to include any individuals who hold their own crypto assets). Demirors, who joined CoinShares in 2018 after a three-year stint as vice President at Digital Currency Group, sits atop $4 billion in client assets. She's seen traditional investment firms like SkyBridge and Gerber Kawasaki take their time coming around to Bitcoin. "It's seven years, for me, of doors being shut in your face," she said.

Gerber Kawasaki, meanwhile, is a traditional wealth management firm which counts $1.8 billion in assets under management. It only recently moved to incorporate crypto, though Gerber said he's been into the space for years. Before he became such a fan of Bitcoin, Gerber was known in the investing world as a Tesla and cannabis bull.

Institutional investment is big business as not all traders or cryptocurrency investors are comfortable managing their own funds. Instead, they search out traditional finance firms or specialized digital asset firms to take care of their cryptocurrency purchases.

A recent report by Coinbase Institutional, which provides advanced trading and custody services for investment firms such as Grayscale, noted that the amount of money in cryptocurrency funds was above $36 billion by the end of 2020—nearly double what they were the previous year. 

Those are impressive numbers, but Gerber suggested it's still early: "Apple is worth basically the same as the entire crypto market today."

Disclaimer

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.