Cathie Wood says banks have a ‘big problem’ thanks to crypto

Cryptocurrency was initially created to circumvent old institutions, and banks may eventually feel the pinch, said Ark Invest CEO Cathie Wood.

Known for her high-risk, high-reward strategy, Wood told CNBC's "Crypto World" on Thursday that the amount of interest investors are showing in DeFi, or decentralized finance, applications could threaten the traditional banking world. There has been a “share shift” when it comes to lending in DeFi, she said.

"The banks have a big problem," Wood said from the Bitcoin 2022 conference in Miami. “They are losing talent to crypto, so they have to raise salaries to attract talent, and they are losing business to DeFi. Loans and savings – a lot of this is happening in DeFi right now.”

Decentralized finance is an umbrella term for various financial products and services that are peer-to-peer, blockchain-based, and eliminate the need for traditional institutions that have historically provided access to those services.

Political institutions are another part of the establishment that is starting to respond to crypto in a more positive way, Wood said.

"What we're seeing is 180 degrees different today than it was a year ago," he said.

He noted the change in position of the US Secretary of the Treasury. Janet Yellenwho had previously expressed concern about cryptocurrencies, unwilling about its possible environmental problems and the risk of illicit activity.

“I remember being asked at the time and basically saying I haven't studied the technology and I haven't studied the instruments of the new asset class. Well, it looks like she's been freaking out,” Wood said.

Ark was the first public asset manager to gain exposure to bitcoin, in September 2015. Wood said the firm still sees the price of bitcoin climbing to $1 million by 2030.