'Banks Are Kind Of Paralyzed': Why Mass Adoption Of Crypto Needs Regulation, Education And Simplification

As crypto and Web 3 evolve, the market paradigm needs to change to secure further growth while also fostering transparency.

College DAO's co-founder Joshua Sum discussed these challenges at Benzinga's Future of Digital Assets conference, talking to a group of experts, including Bitstamp US CEO Bobbz Zagotta, tastycrpyto's Head of Digital Assets Ryna Grace, and Prometheum's co-CEO Aaron Kaplan.

Zagotta pointed out that regulators need as much education about these emerging technologies as the retail participators do.

Looking forward to the adoption curve, he noted that the needs change once early adopters and innovators are in.

"These next ways of adoption have different needs. They need more support, reliable information, and a really simple way to get involved," he said.

Bitstamp's Learn Center serves that purpose, and recently, they also launched the "Crypto Categories" white paper, which aims to simplify access points for newcomers.

Zagotta, a senior executive at a European exchange, noticed a big difference between Europe and the US.

"In Europe, we have tremendous inbound interest, including from some of the biggest banks in the world. While in the U.S., the situation is very different, as banks are kinda paralyzed," he added, clarifying that the US banks know they might lose some clients due to their desire to participate in the crypto ecosystem.

As a brokerage executive, Grace reflected on his experience with retail traders who understand complex financial products. Drawing the parallel with derivatives, he noted that most of his clients started with little knowledge but, with tastytrade's help, were able to achieve financial literacy.

"We found success in showing people, here's how to do it," Grace said, picking out risk as a critical point with emerging technologies.

"We cannot ignore the fact that it is not always safe. There are a lot of risks. It's still very early when we think about DeFi," he added.

Kaplan emphasized the need to rebuild the relationship with retail traders, focusing on federally licensed platforms that provide proper protections. Despite its challenges in the US, the shift towards federal regulation is seen as essential for the industry’s progress.

"Those who are going to survive are going to survive will have to be licensed on the federal level," he said when asked about the "post-FTX ecosystem."

The panelists agreed that the intersection of regulation, education, and technology is pivotal for achieving mass cryptocurrency adoption. As the industry progresses, the ecosystem should focus on creating user-friendly interfaces and reducing the steps required to access various investment opportunities, financial management, and payments. 

With their large user bases, exchanges can make DeFi and other opportunities safer and more accessible.

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