REALLY CLEAR CRYPTO: Why Advisors Need Crypto Training

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Advisors don’t just need help with crypto education, they need to understand what’s most important to learn, where they can learn it, and how to analyze that information for clients. In the process, the wealth management industry may have to navigate a confusing web of conflicting information, some of which comes from highly biased or untrustworthy sources.

The majority of the quality crypto education currently offered comes from companies in the crypto industry, said Blake Richman, senior portfolio manager at Sarson Funds, an asset manager and educational resource for advisors in the space. digital assets, but that doesn’t mean it’s not quality information. .

Many of us have spent the last few years evangelizing this stuff to our friends and family with varying degrees of success, but we do it because we believe there is a global advantage to investing in. this technology, said Richman. We find this important and we want to guide people through education and at the same time advocate for active management.

Active managers understand what’s going on in the crypto space, Richman said, and know the main players involved in the daily news and the innovations that are happening. By learning from active managers in the industry, such as Sarson Funds, advisers can develop a better idea of ​​how the cryptocurrency market behaves.

These managers have become trusted partners of advisers, but the digital asset industry is still struggling with a perception issue. When Richman first entered space, Ethereum had just been launched, and Bitcoin was primarily used as a medium of exchange for shady or explicitly illicit transactions in the darkest corners of the internet.

If you’re showing up at a digital asset conference now, there’s a bunch of people in suits exchanging business cards, Richman said. This change is a symptom of the maturation of the market. The crypto industry used to be in the shadows. Now he has to break out of the old concept and shake up the reputation. The way to do this is to provide new technology and increase value for investors. The case for digital assets grows stronger over time.

There is always a caveat, advisers should also think critically about where their information is coming from, Richman said.

Browsing crypto material should be undertaken the same way a person seeking objective information navigates the media – with critical thinking and an understanding that a journalist’s opinions can impact their writing, said Richman. You must consciously crowdsourcing both sides of a subject. it’s getting easier and easier to do every day in crypto.

Another note to advisers is rather than focusing on the daily volatility of digital assets and the drivers of that volatility, it is more important for advisers to understand and communicate the broader underlying trends that determine the value of crypto. -coins.

Part of the ability to communicate the value of cryptocurrencies is being familiar with the continued development of blockchain technology. It is important for advisors to make sure they stay educated and knowledgeable about technology.

I think the most basic driving force behind change in the industry is innovation, he said. Everything that comes is a derivative of that. Today, the technology and development to date has caught the attention of regulators, governments, and mainstream finance, all of whom have recognized that blockchain technology poses a threat to their influence to some extent.

Different regulators have had different responses. While U.S. regulators like Finra, SEC, and CFTC have taken a measured approach to controlling the development of blockchain technologies, in other countries, especially China, cryptocurrencies have come under scrutiny. closer examination.

The Chinese Communist Party has banned cryptocurrencies and bitcoins. Again. At this point you need two hands to count how many times they’ve cracked down on digital assets, not even the first time this year, Richman said. It’s part of a larger economic effort to move away from their brand of capitalism towards more government control in a more balanced type of economy. The administration of fiat money is a big part of it.

China, along with other countries, view cryptocurrencies as a threat to their sovereignty, Richman said. The results of these crackdowns are usually short-lived bouts of volatility.

Any advisor who wants to keep a close eye on digital assets should not only understand the local approach, but should also take a global perspective. In recent weeks, El Salvador adopted Bitcoin as its official currency, US regulators crushed CoinBases’ efforts to launch a high-yield crypto product, UK Financial Conduct Authority decided to assume more control over the digital asset market, and all of this happened before China’s latest crackdown sparked a new wave of volatility in Bitcoin and most major altcoins.

Blockchains have the potential to disintermediate and compress certain power stacks in government, business and finance, Richman said, leading some regulators to become hostile, or at the very least critical, of of technology.

The innovation just doesn’t stop, Richman said. We were seeing innovation with financial products and services, which are now delivered on a decentralized, unlicensed and immediate basis, which can achieve goals such as providing banking services to underserved communities and the availability of credit in emerging markets. . To this extent, the implications of this technology are endless.

In the past two years, cryptocurrencies have moved out of the lab and into the real world, Richman said, flourishing into dozens of well-built and trustworthy products, hundreds of thousands of daily active users and hundreds of millions of dollars generated by the blockchain. protocols.

Two main areas to watch out for are tokenized securities and non-fungible tokens, or NFTs.

The NFT theme is huge with its artistic and community aspects, but also with more immersive fan experiences, Richman said. It creates extensive bandwidth for creators to connect with their audience. It also has in-game applications like gambling for winning with in-game enabled economy systems using this kind of technology.

With NFTs, artists can access a global distribution platform for their work without having to seek permission or have connections. Success in the art world was once, in part, a function of where you live and who you know, but with NFTs, artists can sell their art using blockchain technology and make permanent connections. with the patrons of their work.

While NFTs are already popularized, in some cases selling for millions of dollars at auctions, tokenized securities have been slower to develop.

There’s a lot of regulation coming into this fast-paced space, Richman said. These things are securities and this has an impact on how securities are traded by brokers. How do brokerage custody laws apply to this? How will rule 15c-3 work with tokenized securities versus a paper security? There are so many innovations going on and there is something to be excited about.

Advisors also need to understand the mathematical logic of investing in cryptocurrency, Richman said.

There is now a more technological population than there was in previous generations, and things like that are more comfortable for them and easier to adopt, Richman said. At the same time, confidence in public institutions and finances has been destroyed. These are the broader themes for people who invest for the long term.

If you believe in technology, daily news becomes a little less relevant.

Click here to view Sarson Fund’s CE qualified educational webinars on Digital Wealth News To learn more about Sarson Funds, visit them online at www.sarsonfunds.com

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