Galaxy Digital Holdings Ltd (OTC:BRPHF) CEO Mike Novogratz maintained expectations for strength in cryptocurrency markets toward the end of last year. Now that crypto markets have retreated, the digital currency enthusiast is diving into what went wrong.
Galaxy Digital aims to be the “smartest guys in the room,” Novogratz said Wednesday during a presentation at Piper Sandler’s “Global Exchange & Brokerage Conference.”
What To Know: The tipping point for the crypto markets seemed to be the collapse of TerraUSD (CRYPTO: UST). This so-called stablecoin was supposed to remain at a consistent price of $1, however, Terra lost its peg to the U.S. dollar and fell sharply.
Stablecoins are cryptocurrencies that are designed to hold value relative to something in traditional finance markets, such as the U.S. Dollar.
Novogratz suggested that UST was not up to par when he said USD Coin (CRYPTO: USDC) is representative of what a stablecoin should be during the conference.
USD Coin is another stablecoin that is tied to the U.S. dollar. It was released in 2018 as a result of a partnership involving Circle and Coinbase Global Inc (NASDAQ:COIN).
See Also: Coinbase Holds Strong On Bitcoin, Ethereum Strength: Here’s Why The Stock Must Hold This Pattern
Why It Matters: Although the TerraUSD debacle seemed to cause a sentiment shift in crypto markets, stablecoins are not the cause of slowing crypto adoption.
Instead, a verification process called Know Your Customer, or KYC, is the main thing holding back crypto and decentralized finance initiatives in particular, according to Novogratz.
KYC is a way for financial institutions to screen individuals to determine whether or not they are who they claim to be. In crypto markets, KYC could help stop users from hiding illicit activity.
Novogratz maintains his bullish stance on crypto and said he expects KYC issues to be solved within two years.
Related Link: KYC Explained: The Importance Of Security In Crypto
Photo: Petre Barlea from Pixabay.