Kevin O’Leary, chairman of O’Shares Investments who is also known as “Mr. Wonderful” in reality show “Shark Tank,” said he is excited about decentralized finance’s potential to disrupt traditional finance, but anticipates a long road for institutional adoption.
Once a skeptic of crypto, O’Leary has become an active participant in the digital asset market. He now owns stakes in crypto exchange FTX, stablecoin operator Circle, and decentralized finance platform WonderFi , which is listed today on Canadian stock exchange Neo Exchange.
O’Leary told MarketWatch he also would invest in the private investment round known as PIPE in Circle, as it plans to go public through the merger with Concord Acquisition Corp
a special-purpose acquisition company (SPAC).
That is partly because he’s intrigued by DeFi’s prospect to lower the costs of foreign exchange transactions. Decentralized finance (DeFi) refers to blockchain-based systems that operate without centralized intermediaries. As the systems eliminate the needs for middlemen, they aim to reduce transaction costs.
The DeFi market has witnessed an explosive growth – the total value locked on DeFi protocols amounted to $84 billion on Tuesday, Aug. 31, a more than fourfold-increase from the number at the start of this year, according to data site DeFi Pulse. The surge comes with increasing regulatory attention. DeFi projects aren’t immune to regulatory oversight, Gary Gensler, chairman of the Securities and Exchange Commission, told The Wall Street Journal in an interview earlier this month.
“[When buying stocks in other currencies] I have to pay the FX traders to do the conversion and they add absolutely no value whatsoever. Zero,” O’Leary said in a phone interview.
“If the regulators in Switzerland, in England and in the Eurozone approved a payment system using DeFi, we could decimate the costs. We can eradicate them by 80%, 90%,” he added.
Skeptic to active player
O’Leary’s change in attitude toward crypto investing resulted from the more flexibility he observed in the regulatory side, he said. In 2017, he thought the regulators were completely not on board with the asset class. “I just didn’t want to get the taint of being some kind of a crypto cowboy.”
“I have done a 180 on that situation as the regulator has in some respects become more flexible, particularly in countries like Germany, Switzerland, England, Australia, New Zealand, Canada, places where I invest now,” he said. He also anticipates more wiggle room in terms of U.S.’s regulation over time.
O’Leary also started investing in crypto as a hedge against inflation. With inflation rates of over 2%, “I’m actually losing money holding cash,” O’Leary said.
Hurdles for institutional adoption
Despite his own participation, O’Leary said a broad institutional adoption of crypto still faces major…
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