Institutions Are Interested to Invest In Crypto, But It’s Not Easy, Says Raoul Pal

According to Raoul Pal, ex-Goldman Sachs executive and Co-Founder and CEO of Real Vision, institutions are very interested to get access to the crypto markets but there are still significant barriers for them to do so.

Scott Melker recently spoke with Pal on Wolf of All Streets podcast. The market expert told Melker that the average person doesn’t grasp how much time and effort it takes for institutional investors to allocate capital to crypto.

Pal also pointed out that it’s not that straight-forward for institutions just go and buy crypto. They struggle with fitting crypto into the administrative systems that are built for traditional financial products.

“They’re all over this, everybody is… it takes a while. People don’t understand that for institutions to go, ‘Oh well, we’re going to buy Bitcoin.’ Okay, how do you mark-to-market it? What is the open? What is the close? Which price do you take? There’s no singular exchange. Then how do you custody it? How do you account for it? All of this stuff takes months of work.”

The ex-Goldman Sachs exec also explains that Generally Accepted Accounting Rules (GAAP), which are the standard collection of rules and standards for financial reporting, make it very difficult to buy and report crypto investments for corporations.

“It just takes time. There’s a lot of people to get across the line and you need to appease a lot of people. For the corporations, it’s how you account for it in GAAP accounting. This is the big problem is you can only mark it down, you can’t mark it up, and it has volatility in your quarterly earnings. So only people like Michael Saylor will accept it, others won’t.

That’s why the corporations are slow. They want to do it, I’ve spoken to many but they’re like, ‘These accounting rules, we don’t know what to do.’”

Pal predicted earlier last year that a ‘”tidal wave” institutions would descend upon the crypto markets and cause exponential growth in the industry.