Prominent Investor: Not a Dime Will Come to Crypto Until Regulators are On Board

Shark Tank star Kevin O'Leary, AKA "Mr. Wonderful," said on CNBC's Fast Money that he firmly believes not a dime from institutional investors will come into the crypto market, at least in the short-term.

Over the past 12 months, especially in early 2018, the narrative of institutional investors entering the crypto market has intensified, without a concrete basis for the claim.

In a purely logical sense, for institutional investors to enter the crypto market, which includes large-scale pensions, hedge funds, and academic institutions, a trusted custodianship and a suite of institutional crypto products are necessary.

Most recently, Coinbase, the world's largest crypto exchange, and wallet platform launched Coinbase Custody in cooperation with crypto hedge funds.

"Coinbase Custody is a combination of Coinbase's battle-tested cold storage for crypto assets, an institutional-grade broker-dealer and its reporting services, and a comprehensive client coverage program,".

In an interview with CNBC, O'Leary stated that trusted custodianship may not be sufficient to drive institutional investors into the crypto sector just yet.

While the first custodian solution from the crypto market has been released, not all regulators are properly on board with digital assets.

"My take on this is, institutional money is not going to go there yet [to crypto] for one basic reason: compliance and the regularly environment. Until you know with certainty, if you're an asset allocator and you're running a sovereign fund, you're not gonna put a dime in this stuff. Because the regulators are not on board yet."

The launch of a Bitcoin ETF will demonstrate the proper interest and demand for crypto from a large group of millions of retail investors, who for compliance and regulatory issues, may not have been able to purchase and sell digital assets on crypto exchanges.

While some investors are expecting bitcoin ETFs and more custodian solutions to arrive by the end of 2018, major investors still believe that institutional investors are far away from committing billions of dollars to the crypto market, and specifically, major digital assets bitcoin and ether.