- Interaxis
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- Week of Sept. 11, 2023
Here’s what was happening this week, and how it affects financial professionals.
Franklin Templeton's ETF Move: Closer to the Bitcoin Spot ETF?
Franklin Templeton, a global investment firm with over a trillion dollars in assets under management, has entered the Bitcoin spot ETF (Exchange-Traded Fund) arena. While the market has been speculating about the approval of a Bitcoin spot ETF for some time, Franklin Templeton's entry is significant due to its financial clout and reputation. The move suggests that the firm might have insights into forthcoming regulatory decisions, possibly accelerating the approval and launch of Bitcoin and even Ethereum ETFs.
For financial advisors and CPAs, this development is a strong indicator that cryptocurrency is becoming increasingly mainstream in the investment world. The potential approval of a Bitcoin spot ETF could lead to a surge in capital inflow, driving up the value of Bitcoin and possibly Ethereum. This presents an opportune moment for financial professionals to deepen their understanding of cryptocurrencies and prepare for client conversations around incorporating crypto assets into portfolios. Advisors who are ahead of the curve in this area will be better positioned to guide their clients through the evolving landscape of digital assets.
FTX Liquidation Scare: A Wake-Up Call for Crypto Risk Management
Crypto markets recently experienced a dip following news that FTX liquidators would begin selling off a significant amount of crypto assets to satisfy creditors and investors amid bankruptcy proceedings. The assets in question include Bitcoin, Ethereum, and Solana. However, the market rebounded as investors realized that the liquidation process, managed by Galaxy Digital, would be gradual and designed to minimize market impact.
This episode serves as a cautionary tale for financial advisors and CPAs about the volatility and sensitivity of crypto markets to news—accurate or otherwise. Given that crypto markets operate 24/7, rapid price swings can occur before the full context of a news story is understood. Advisors should be prepared with a strategy to assess the real impact of such news on crypto assets and advise their clients accordingly. Quick and informed decision-making is essential to navigate the fast-paced crypto landscape.
Beyond Crypto Assets: How Tokenization is Changing the Financial Landscape
Robert Leshner, founder of the Compound protocol and now leading Superstate, made a compelling point at the Permissionless Conference: Institutions are not merely diving into Bitcoin or Ethereum. Instead, they are exploring how blockchain technology can make their operations more efficient. J.P. Morgan echoed this sentiment, revealing that they have saved millions by using tokenized assets in repo markets. The focus is on efficiency and new use cases, rather than just asset accumulation.
Financial advisors and CPAs should take note: The future of finance is not just about crypto assets but also about the broader applications of blockchain technology. Tokenization is set to revolutionize how assets are managed, offering clients more options for how and where to use their money. As tokenized assets and smart contracts become more prevalent, advisors will need to understand these technologies to provide comprehensive financial guidance. The landscape is expanding, and professionals who adapt will be better equipped to serve their clients in this evolving ecosystem.
Grab & Circle Partnership: The Future of Payments is in Your Web3 Wallet
Grab, often referred to as the "Uber of Southeast Asia," is partnering with Circle to offer payments via Web3 wallets using the US Dollar Coin (USDC). This development follows last week's news that Visa is also integrating USDC on the Solana blockchain. The partnership aims to facilitate seamless payments for services like rides and deliveries, allowing users to pay and get paid in crypto, thereby keeping more transactions on-chain.
The integration of Web3 wallets and stablecoins like USDC into mainstream apps like Grab is a significant step toward the mass adoption of crypto for everyday transactions. Financial advisors, CPAs, and other professionals need to be aware of these emerging use cases. As crypto payments become more commonplace, questions around asset safety, transaction fees, and access to decentralized finance (DeFi) lending protocols will become increasingly relevant. Advisors must stay updated on these developments to guide their clients effectively through the rapidly evolving financial landscape.