Live at Exchange: Bitwise CIO Matt Hougan Talks Crypto Theft With Dave Nadig

Investors are understandably concerned with the risk of crypto theft. Crypto criminals directly stole a record $3.2 billion worth of cryptocurrency last year, according to Chainalysis, marking a fivefold increase from 2020.

Dave Nadig, financial futurist at ETF Trends and ETF Database, sat down with Matt Hougan, CIO at Bitwise Asset Management, today at Exchange: An ETF Experience to discuss the risk of theft that comes along with investments in cryptocurrency.

Every time I opened the newspaper — when we had newspapers — I read about another half a billion dollars disappearing from the global crypto ecosystem,” Nadig said, asking Hougan to clarify the risk of crypto theft.

Hougan pointed to the simplicity for institutional investor custody of crypto, highlighting the similarities with traditional custody.

“Fidelity custodies crypto, Bank of America is developing a crypto custodial system. Lloyds ensures those customer deposits,” Hougan said. “So if you’re an institution holding crypto for the long term, it’s easy to do it safely and securely.”

Hougan said one of the benefits of crypto is that you can send a billion dollars to anyone in the world and settle in 10 minutes or less. “You can’t have settlement finality without the risk that it could be stolen.” 

“Crypto is more like cash than a credit card,” Hougan said. “That’s a feature of it, but the risk is that if somebody takes it, it’s gone forever. Because we’re in these early stages of development, you see people mishandling crypto, you see people building contracts that have bugs in them, and there is no recovery.”

Hougan said this is part of the development and part of why there is an inherent risk to the asset class.

“You can’t have the benefits of crypto, you can’t have money moving at the speed of light, and [also] have all those protections,” Hougan said. “It’s the yin and the yang of crypto.”

For more news, information, and strategy, visit the Crypto Channel.