A select group of financial innovation thought leaders gathered at Hub Culture Davos to discuss the growing institutional character of digital assets. The event was sponsored by Copper.co.
The group was asked to reach conclusions around three key questions:
- What responsibility do crypto companies have to educate consumer investors?
- How can institutional investors be better engaged around crypto?
- What’s missing, that’s creating undue risk in the sector?
Here are the key findings from the discussion:
Availability of investments: Traditionally, large financial institutions had exclusive access to hedge funds and then became available to smaller financial players down the line. With digital assets, this dynamic is flipped around, and while this presents some challenges, it is a positive development. In driving consumer protection, we want to avoid limiting informed choice.
Education also emerged as a strong theme.
Decentralised education: As digital transformation permeates every aspect of business, we are seeing individuals, companies and governments grappling with critical questions about how it is playing out – and how it should play out – especially in respect of digital assets in education. There are concerns that centralising education for decentralisation technologies is inherently paradoxical. Ultimately, the aim should be to educationally empower everybody along the nodes, perhaps guided by standards, and this should be a core goal of all parties.
Delivery of education: Change in how information is disseminated is required and remains a challenge. The "pay to play" model for much of the industry press presents trust and accuracy issues for using media and internet search, as much as delivery tools. Further bias concerns were raised with regards to social media influencers.
Responsibility of education: There's no one unique entity that is responsible to educate. Responsibility has to come from multiple parties, such as investors in retail companies, regulators and consumers. A mandate from regulators to incentivise service providers to educate the public would most likely be required to facilitate this.
Reputation risks: The reputation of crypto as being an unsavoury or underworld phenomenon was voiced as a point of risk in both the short and long-term to multiple nodes of the industry. The question was raised about who should be engaged to get the rules rewritten. The concept of a collaborative effort to develop a credible and sophisticated industry lobbying function was identified. The term "lobbying" was deemed more appropriate than "influencing" as it fits into a pre-existing construct designed to facilitate systemic change.
Regulators: The responsibility of regulators is to safeguard the retail investor, promote stability, manage risk and encourage innovation. It is imperative the infrastructure that is available to them is giving very clearly defined swimlanes of what they can and cannot do. Capacity building among regulators is necessary.
We also note the diversity of our group, which was 40 per cent female – unusual for a Web3 event.