“It’s all being bought by retail.”

Speaking at CB Insights’ Future of Fintech conference Wednesday, Nasdaq president and CEO Adena Friedman hit on a theme almost everyone at the event echoed: the central role normally marginal figures – small-time investors and millennials in particular – play in the cryptocurrency market (as well as financial technology or “fintech” more broadly).

During the first day of the conference in New York City, Friedman spoke about retail investors – who she called “Mr. and Mrs. 401(k)” – and their interest in crypto tokens created via initial coin offerings, or ICOs, a funding mechanism that exploded in late 2017 and early 2018.

And while Freidman expressed “real concerns about transparency” and the fear that ICOs could “take advantage of people,” she acknowledged that the technology opens up access to the early-stage investments, particularly now that IPOs are subject to so many rules that she said “no longer serve a purpose … or protect investors.”

Even though IPOs are a big source of revenue for Nasdaq, Freidman said of ICOs:

“You want to make it so that retail has access to great companies.”

Still, quite a bit of ambivalence was displayed about the fundraising mechanism, made popular by ethereum’s ERC-20 standard but now available in several different forms on many different blockchains.

Even as a conservative Republican with inclinations toward light regulation, Mick Mulvaney, the acting head of the Consumer Financial Protection Bureau (CFPB), raised the frightening prospect of no oversight at all – speculating on what would happen if Mt. Gox “became a regular occurrence.”

However, he went on to recognize that the application of old laws and regulations to cryptocurrency could produce “an absurd or unintended result,” which the CFPB wants to avoid.

Retail will be fine

Still, several speakers noted that retail investors will need both help and protection in interacting with the high-risk, high-reward ICO market.

These are not wealthy investors, after all, who the SEC treats – in Friedman’s words – “like big boys, big girls.”

In contrast, Vlad Tenev, co-CEO of Robinhood, the millennial-focused, mobile-only investing platform, expressed no hint of high-minded concern for retail investors. These small-time traders are Robinhood’s “bread and butter,” he said unapologetically.

The app started out offering commission-free trades in equities, followed by options – commonly regarded as high-risk investments – and then, in January, added bitcoin and ether to the investment options. In May, the company raised $363 million in a Series D to build the “largest crypto platform.”

This move into crypto – which is currently available to people in 16 states – came after large numbers of users began requesting that Robinhood list cryptocurrencies, Tenev said, making no mention of agonizing over how best to protect this group of investors.

If anyone should be worried about their financial futures, it is the stock brokerages and cryptocurrency exchanges that charge high fees, he continued, adding:

“If you look at cryptos, people are paying exorbitant fees right now – four, five percent per transaction – and it’s very similar to brokerage before we came in and lowered fees dramatically.”

Robinhood’s small-fry millennial customers, he seemed to be saying, are too smart to pay those kinds of fees.

Don’t mention the bears

And yet, what went mostly unsaid at the conference was telling.

Bitcoin prices have waltzed off a cliff since hitting nosebleed highs around $20,000 in December 2017. According to CoinDesk’s Bitcoin Price Index, the cryptocurrency is trading for around $6,750 at the time of writing – down more than two-thirds from its all-time high.

But no one seemed particularly eager to talk about the pain this bear market might have caused retail investors. Friedman and Mulvaney hinted at it in the abstract but made no mention of the fact that many retail investors are nursing steep losses right now.

At the same time, speakers and attendees sometimes appeared to salivate over the goldmine that millennials and other small-time investors represent. Soon the younger generation will be worth trillions of dollars, a CB Insights researcher pointed out in one presentation.

And Tenev boasted that over a million people signed up to Robinhood’s waiting list to trade cryptocurrency within the span of a few days – this at the very height of the recent mania. He also mentioned that equity trades on the platform are often in the “tens or hundreds” of dollars – in other words, implying that its users are hardly wealthy (though maybe they’re just cautious).

As such, it was perhaps easy for some to come away from the conference with the same see-sawing misgivings that Mulvaney and Friedman seemed troubled by.

While some ask why regular people shouldn’t be able to access potentially lucrative crypto opportunities, the space is rife with half-truths, sketchiness and outright scams, and in turn, another question presents itself: should often-inexperienced investors be expected to fend for themselves? These questions aren’t likely to go away soon.

But this new asset class, Robinhood’s Tenev said:

“Has staying power, significant staying power.”

Future of Fintech conference image via CoinDesk