Crypto's lack of gender diversity is drawing increased scrutiny

The cryptocurrency industry has the potential to rectify long-standing inequities in wealth and economic opportunity, according to industry insiders, but the field is still lacking in terms of gender equality. Increasing transparency around diversity in the industry has captured lawmakers' attention in Washington, who in early August asked 20 of the leading digital assets companies and venture capital firms that invest in cryptocurrency to provide information on their diversity and inclusion practices.

Such data remains elusive, but a report from OKX, the Seychelles-based cryptocurrency exchange, put the ratio of men to women in the global blockchain industry at nearly 8:2, with only 24% female employees in the field, as of June. The OKX report was compiled using data from LinkedIn Talent Insights.

Even as more women join the cryptocurrency world, there is still a "male dominance in the field," said Rachel Lin, Singapore-based CEO and co-founder of SynFutures, a decentralized derivatives trade platform.

Gender diversity is especially lacking in leadership roles throughout the industry, said Madeline Hume, Chicago-based senior research analyst at Morningstar Inc. "When you look at the ranks of the crypto-native hedge funds and asset managers, there are very few women that are in the positions of analyst and above," Ms. Hume said.

Sheila Warren, San Francisco-based CEO of the Crypto Council for Innovation, a global alliance of crypto leaders, added, "I think more what it reflects is, historically, who do we as a society empower to take risk? Who gets funded to build a company?"

But Ms. Warren noted that the industry is nuanced, and certain parts are more inclusive than others.

"Crypto's not a monlolith," she said. While some parts of the community can be "absolutely toxic" and "misogynistic," she said crypto is "in general, an extremely welcoming community."

In their letter to the 20 firms, members of the House Financial Services Committee stressed the importance of transparency in achieving racial and gender equity.

The letter came after the committee held a hearing on June 30 titled Combating Tech Bro Culture: Understanding Obstacles to Investments in Diverse-Owned Fintechs.

"There is a concerning lack of publicly available data to effectively evaluate the diversity among America's largest digital assets companies, and the investment companies with significant investments in these companies," five Democratic committee members wrote in the letter.

The SEC also requested that regulated entities, such as money managers and registered investment advisers, voluntarily disclose their diversity metrics in 2020, following a previous request in 2018. However, in both cases, the response rate was less than 10%.

Even as industry insiders grapple with the need for more gender diversity in the space, they said cryptocurrency retains the potential to resolve inequities.

"I do see it as … this time period's best chance of addressing inequity in current systems, whether that's technical systems or financial systems, and providing a more equal playing field," Ms. Warren said. Cryptocurrency, for example, can be used by women in Afghanistan, who otherwise face difficulty managing their own finances.

Ms. Warren and other women in the digital assets industry also noted that the "crypto bro" stereotype is not as pervasive as some may think, and certain parts of the industry are more welcoming than others.

Molly Mackinlay, Seattle-based head of engineering, product, and research development at Protocol Labs, a research lab for blockchain network protocols, said she's worked with many talented women in the industry.

"I feel like there's actually a lot of groups and communities in certain parts of the Web3 ecosystem that are very, very diverse and have a lot of support for people from a variety of different backgrounds," Ms. Mackinlay said.

Women also don't invest in cryptocurrencies as much as men do, said Ms. Hume, who cited risk aversion as one reason.

"It's been well established in research that women engage with investment risks differently than men," Ms. Hume said. "And financial advisers, in particular, have observed that when investment risks are unknown, women are more likely to take money off the table and pass on the opportunity. And what we have with crypto is an asset class that, at this point, the risks are still mostly unknowns."

According to a report released this year from Gemini Trust Co. LLC, a cryptocurrency exchange, 32% of crypto owners in the U.S. are female. Data released in February by eToro USA LLC, a trading platform for cryptocurrency and other exchanges, indicates that 41% of female investors in the U.S. have crypto holdings, and 41% plan to increase them.

Lule Demmissie, U.S. CEO of eToro based in New York, said while she thinks crypto has a "very diverse consumer base," there needs to be an increase in the diversity of crypto creators.

"Unless any innovation has a diverse set of people creating it, by definition, it cannot become an equitable product over time," Ms. Demmissie said.

According to Morningstar's Ms. Hume, increasing diversity in the crypto space could lead more companies to success.

"We know that diverse investing teams and diverse research teams often come to more holistic conclusions and can sometimes spot risks or other ways of tackling a problem that a less diversified team could not," she said.

Ms. Demmissie echoed this, adding that diversity and inclusion checks "our collective blind spot."

"At a minimum, what diversity of opinion and thought and life and identity does is it really checks our blind spots when we're problem solving," Ms. Demmissie said. "And that's a really powerful component of avoiding moral hazards."

Another benefit of diverse workplaces is that it allows for people to create meaningful relationships, according to Protocol Labs' Ms. Mackinlay. She said that she has gained both friends and role models from the women in her Web3 community.

"When it comes to finding role models, or people that I can learn from and talk to openly, that's always been something that has been super valuable," she said.

As the leader of a 125-person team, Ms. Mackinlay said she aims to make everyone feel "they're valued and their contribution to the team makes a big difference," regardless of their backgrounds.