According to Morgan Creek Digital’s managing partner, it makes no sense for investors to speculate on crypto assets without insurance.
Mark Yusko says in a new interview on the Blockworks Macro podcast that crypto assets must provide value to customers in order for the centralized finance industry to thrive.
“Value requires money, either equity, debt, or a claim on cash flow. A token that exists solely to allow people to exchange it is not valuable. Uniswap does a lot of volume, but if the token doesn’t give me a cut of the cash flow generated by these decks, it’s not really serving its purpose.”
He believes crypto should have an insurance pool similar to the Federal Deposit Insurance Corporation (FDIC), which insures deposits in US banks in the event of bank failure.
“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 must be some sort of lender of last resort, safety of last resort, or whatever.”
According to the hedge fund veteran, every industry in the world requires a viable and robust insurance market to thrive, and the crypto industry is no exception.
“You couldn’t get a home loan if you couldn’t insure your house. You wouldn’t drive a car if you couldn’t insure it, but we speculate on these assets with no assurance of insurance. It simply does not make sense.”
