Crypto CEO Says Government Has It 'Completely Upside-Down' On Crypto Vs AI Regulation

Mike Novogratz, the CEO of the blockchain and digital asset leader Galaxy Digital, said that the U.S. government has it "completely upside-down" in enforcing regulations on the cryptocurrency sector and is taking no notice of Artificial Intelligence (AI).

"When I think about AI, it shocks me that we're talking so much about crypto regulation and nothing about AI regulation. I mean, I think the government's got it completely upside-down," Novogratz said at Galaxy Digital's fourth-quarter conference call Tuesday.

The chief executive's concern may have been rooted in his fear that artificial intelligence will start a "deep fake" identity problem when he mentioned, "You know, like, the deep fake world is going to be so much more prevalent, and so how do you prove identity in a world like that?"

"In lots of ways, one of the best use cases for crypto is going to be identity around AI, because pretty soon you're going to get a fake Mike Novogratz, hopefully with hair [...] how do you prove identity in a world like that?" Novogratz said while being optimistic that blockchain-based applications will play a crucial role in fighting some of the issues AI might initiate.

"Crypto and blockchain is going to have a huge role in that. It is dumb to think that we should cache this industry because of Sam Bankman-Fried in his Bermuda shorts, period," he noted.

Novogratz also sounded optimistically bullish about cryptocurrency amid the ongoing crackdown by U.S. regulators.

During the conference call, the chief executive mentioned that the banking crisis in the country serves as an "adrenaline shot" for Bitcoin's price and offered the cryptocurrency community an "unbelievable resilience" toward the broader crypto industry.

The executive offered a couple of major reasons for his bullish stance on crypto, which include seller's exhaustion that reduces the sell-pressure and the number of activities coming from countries in Asia, and the other one is retail.

"What's promising, and what has driven crypto broadly this year, is two things. One, all the selling that needed to get done got done, right? There was so much bad news, if you had to sell, panic selling and just the nervousness of 'Oh my God! This thing could go to zero,' and people were in sheer panic, you had seller's exhaustion. But, you've had Asia reopen," Novogratz said, adding, "And you're seeing retail, who is just resilient, they believe in this space, and it's one of the things that drives me crazy with our politicians who try to be paternalistic and say, 'Oh, we need to protect retail."