The managing partner of crypto hedge fund Morgan Creek Digital says it does not make sense for investors to speculate on crypto assets without insurance.
In a new interview on the Blockworks Macro podcast, Mark Yusko says crypto assets need to offer value to customers so the centralized finance industry can take off.
“There has to be money either equity, debt or claim on cash flow in order for there to be value. A token that simply exists so people can trade it back and forth isn’t value. Uniswap, it does all this volume, but if the token itself doesn’t give me a share of the cash flow generated by these decks, then it doesn’t really have the right function.”
He says crypto should also have an insurance pool similar to the Federal Deposit Insurance Corporation (FDIC), which insures deposits in US banks in case of failure in these financial institutions.
“The other piece that needs to happen, I believe, is the taking a portion of the transaction layer fees and friction and creating an insurance pool, the same way FDIC does for the banking system. There has to be some lender of last resort, safety of last resort, whatever it is.”
The hedge fund veteran says every industry in the world needs a viable and robust insurance market to flourish, and the crypto industry is no different.
“You could never get a home loan if you couldn’t insure your house. You would never drive a car if you couldn’t insure it, and yet we speculate on these assets with no promise of insurance. It just doesn’t make any sense.”
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