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Ross Gerber: Don't Trust Bitcoin? ‘FDIC Is a F-ing Fantasy’

2 Mins read

At today’s Ethereal Summit hosted by Decrypt, one of the biggest new entrants to Bitcoin investing and a veteran Bitcoin investor put their fingers on why some institutions and people have been slow to adopt cryptocurrency: It’s hard to break the dollar habit.

cryptonews.net

Ross Gerber, CEO of wealth management firm Gerber Kawasaki, which announced in March it would help clients buy and manage cryptocurrency via Gemini exchange, said the trust in the almighty dollar—and fear in crypto as risky—is misplaced. In his view, the Federal Deposit Insurance Corporation (FDIC), which insures customers’ holdings in traditional banks and credit unions, is weak.

“The FDIC went bankrupt in the financial crisis,” said Gerber. “The FDIC doesn’t exist. That’s a fucking fantasy. Rule number one: Any promise the US government makes is a fantasy. We don’t have any money, we have a trillion in debt. So with the banks gone or [if] JP Morgan goes under, FDIC covers 0% of it.”

Gerber was referring to when the FDIC became insolvent following the 2008-2009 global financial crisis. Though it did not technically go bankrupt, it was forced to place a one-time fee on banks to cover its losses.

CoinShares CSO Meltem Demirors, the veteran Bitcoiner on the panel, which also included Dan Barile of SkyBridge Capital, seized on Gerber’s point to make a larger one that government control of money should be re-thought.

“What Bitcoin is enabling, cryptocurrencies are enabling, is the separation of money and state,” she said. “What we’re trying to do is a really challenging cultural and social paradigm shift that’s just going to take a long time for people to internalize because change is really really hard. It’s really really hard for humans to incorporate new information.”

Gerber said such a separation is an idea that’s come full-circle. “Ironically, money started as gold, and it was stateless when it started,” he said. “The US dollar was really Bitcoin in 1780. So if you would have asked the British what they thought of the US dollar in 1775, they would have said, ‘It’s fucking Bitcoin.’ Rebels printing their own money!”

The panel represented a coming together of two different types of institutional investor (a term Demirors said was in the process of being redefined to include individuals who hold their own crypto assets).

Demirors, who joined the digital asset investment group in 2018 after a three-year stint as Vice President at Digital Currency Group, sits atop $4 billion in client assets. She’s seen traditional investment firms like SkyBridge and Gerber Kawasaki take their time coming around to Bitcoin.

“It’s seven years for me of doors being shut in your face,” she said.

Gerber Kawasaki, meanwhile, is a traditional wealth management firm which counts $1.8 billion in assets under management. It only recently moved to incorporate crypto, though Gerber said he’s been into the space for years.

Institutional investment is big business as not all traders or cryptocurrency investors are comfortable managing their own funds. Instead, they search out traditional finance firms or specialized digital asset firms to take care of their cryptocurrency purchases.

A recent report by Coinbase Institutional, which provides advanced trading and custody services for investment firms such as Grayscale, noted that the amount of money in cryptocurrency funds was above $36 billion by the end of 2020—nearly double what they were the previous year.

Those are impressive numbers, but Gerber suggested it’s still early: “Apple is worth basically the same as the entire crypto market today.”

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.

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