What is driving crypto mass adoption in 2022? | Interview with Gemini COO

Good afternoon from Bitcoin 2022 in Miami. I'm Ronella Hernandez with Cointelegraph, and I'm here with Noah Perlman, the chief operating officer at Gemini.

Thanks so much for having me.

Thank you. So let's start from the beginning. How did you get into blockchain? How did you first hear about it? And do you remember the price of bitcoin at the time?

I think I can answer all of those. So I actually have a somewhat usual trajectory to crypto in that I started interested in finance and actually worked at a traditional finance shop for almost 14 years. One of the duties I had at the bank that I worked at was evaluating all the crypto and blockchain opportunities that came to the bank, evaluating them both for credit worthiness, reputational risk, regulatory concerns. And through that, I became interested and like the cliche down the rabbit hole into crypto. When the opportunity came on, Gemini was looking for a chief compliance officer. I was contacted, was I interested in applying, and the rest is history, as they say.

All right, and then how do you see the role of Gemini in the growth of blockchain and mass adoption?

Yeah, great question. So, look, we have a very specific role to play in the ecosystem. And actually, if I can sort of talk a little bit about the state of the crypto report that we just issued. So we. Gemini issues every year a state of the Crypto report surveys almost 30,000 adults in 20 different countries. And I know we'll get into some of those results, but one of the things that is very clear from that survey is that people want a regulated compliance solution, and that's the role that Gemini plays. Since our founding, we have been about security, about compliance, about regulation. The motto of our founders, Tyler and Cameron Winklevoss, is we ask for permission, not forgiveness. So wherever we operate in the world, we do it with collaboration with the regulators. And there's definitely a demand and a need for that, and that's part of the role that we play.

Okay. And so I know in this report, it was found that the ownership of crypto has doubled, especially in Latin America and Asian countries. So what do you think is the biggest driver of that?

Yeah, yeah, so we did that exactly right. So in 2021, it was a breakout year for crypto. Almost 50% of people bought their first crypto in 2021. And I think there are a number of things contributing to that sort of wider adoption. So one is something what we just talked about is regulation and security, and it's. Crypto is no longer the Wild, wild West. The longer it persists, the more people feel comfortable that it's safe and secure. And then the other thing, a more unfortunate driver of adoption is simply the sort of dislocation you're seeing in the world. So we found, the report found that inflation was a big driver. And in fact, we found that in countries where the currency has been significantly devalued over the last 10 years, people there are five times more likely to say they want to buy crypto.

Right, yeah. Out of desperation or just a need for alternative payments and transactions?

No, exactly, the need. You hit it right on the head. The need. So in developing countries, the results would suggest that crypto is a nice to have. Maybe this rounds out the portfolio. But in countries that are developing or where there is severe sort of currency volatility dislocation, it becomes a must have. And that's what the numbers are showing us.

And what do you think are some of the barriers to adoption?

Yeah, good question. So a couple barriers. So one, despite what I said earlier about regulatory clarity, that's still a big, that's still a big barrier to adoption. People around the world, not just in the US are, is this legal? What is this crypto all about? And having some regulatory clarity there. The other big one is education. And people still need to be more educated about what crypto is. And interestingly enough, one of the findings that came out of a report that, and this probably, of all the ones this surprised me probably the most is that people found. We found that people were more likely to buy crypto if they had more education about crypto or did their own research than a recommendation from a friend. And the reason that surprised me is in traditional finance, you like to think that the friend network, oh, this is a financial advisor I work with. I recommend them that, that drives adoption. Here, it's really being educated. It's one of the reasons why we invest a lot in education. We've got a property, Cryptopedia, which is a great beginner sort of starting point for people, is why we're really committed to it.

Okay, and then what other initiatives do you have in order to establish more education?

So Cryptopedia is the big one. The other thing that we do is we, through some of our properties, we've got a frontier, an investment fund, and something that we're not quite ready to launch publicly. But I can talk about it. I mean, one of the main things it's going to be doing is investing in core developers and investing in, you know, resources to help educate more people.

About and what about on the institution side? What is their incentive to adopt crypto and to work with Gemini?

Yeah. So? Well, institutions are coming in because. For a number of reasons. One is they see the opportunity. And we've seen in recent weeks, I mean, we've seen Goldman do a trade Cowen, we've seen other institutions come in. And despite the fact that just a few years ago, we all know the quotes about what they were talking about, crypto and not even allowing. I mean, I've heard anecdotes that at some banks, you couldn't even, like, put crypto in a memo. But now they're coming in, and one of the reasons they've gotten comfortable is players such as Gemini, and there are others, too, who understand regulation, who play by the rules, who understand reputational risk, who understand kyc. An institution is not going to partner in this space without somebody who plays by the same rules. It's just too much risk for them. So that's a big driver.

Okay. And what about stablecoins, do you think? Like, what are the policy issues there when it comes to adopting stablecoins?

Yeah. So stablecoins are interesting, and I'm sure most of your viewers know what they are. But for those who don't, stablecoins are simply cryptocurrencies, crypto coins that are pegged one to one to a particular currency, so there's no underlying volatility. So, for example, Gemini has one gusd, the Gemini dollar. It's literally pegged one to one. It doesn't change from a dollar. There's been some controversy about stablecoins because there are some that are issued where it's unclear that there's actually a real dollar backing it. And I won't name names, but there have been audits and concerns that are the funds really there? Gemini$, by contrast, and again, there are others that do this as well. Every single dollar is backed by a real dollar that's audited by the dfs. And so you don't have those concerns there. But I think the general concern is for those. One of the big concerns is that where there isn't a real dollar, is there some real risk to the financial system because you've got billions of dollars sloshing around and is it backed by anything?

Right, right. Okay. And since we are at Bitcoin Miami, I wanted to ask you where you saw the bitcoin. Where you see the bitcoin ecosystem going and growing in the next few years.

Yeah, sure. And now I'll answer your question at the outset what was the price of bitcoin? When I first. I think it was about 4,000, give or take.

Okay.

So, you know, even with the sort of recent pullback the last couple days, still, you know, 10 times where it was when I started.

Yeah.

And I know for a lot of people that 4,000 number is probably 10, 20 times where they found it, but that's where I was when I really started following it. So, look, I still think. I think bitcoin, I know we're at the conference, and obviously we've got thousands and tens of thousands of people here who are. Who are talking about and studying it. You know, it's here to stay. I'm excited about lots of different projects, but bitcoin remains the project that is sort of, you know, the OG as it were. And I think that, again, for people who are less close to the space, you know, a lot of the criticisms about its effectiveness as of currency, you know, speed, energy, I think these are while legitimate questions, I think they're all being solved as the ecosystem evolves. And one thing, I mean, bitcoin, for those of us who are following it, I think a lot of us would agree it's really a store of value. It's digital gold 2.0. Easier to transport, more finite, a great inflation hedge. So big things ahead.

Do you think it has the possibility of becoming a standard for global financial transactions?

I do. Now, where I, you know, I come from, it may be more conservative than others in that I don't know that that's an inevitability, but I don't think it's impossible either. And I think there is a likelihood that you might see increasing adoption and start really seeing it as the standard.

All right, Amazing. Well, thank you so much, Noah, for your time.

Thank you so much for having me.