As advisors continue to receive more and more questions from clients on phone calls, understandings the perspective of the two top advisor credentialing organizations – the Certified Financial Planner Board of Standards (CFP Board) and the Chartered Financial Analyst Institute (CFA Institute) – is important. But these two organizations warn advisors to look before they leap.
In its report, the CFP Board chose to neither mandate nor forbid its designation holders from recommending cryptocurrencies and cryptocurrency-related assets or providing financial advice about those investments.
The Board will apply the same standards to cryptocurrencies and cryptocurrency-related assets that it applies to all assets; however, it also recognizes that these assets may present heightened risks to clients and have some unique attributes.
In any advice setting, including financial planning, CFPs are required to comply with the duty of care, duty of competence, duty to comply with the law and the duty to provide clients information about costs, as well as duties when selecting, recommending and using technology.
The CFA Institute gave their guidelines in the form of “Cryptoassets: Beyond the Hype,” a report oriented towards investment professionals and financial analysts, which was released this week.
According to the CFA Institute, three issues need to be resolved before crypto assets can be fully embraced by mainstream investors: valuation, fiduciary duty and the custody of assets.
The Institute’s researchers then provided fiduciaries and institutional investors with six loose guidelines, which involve due diligence, principles of portfolio construction, technical analysis, fundamental analysis, asset acquisition and asset safekeeping.
Crypto users that frequently interact with new and existing platforms will likely receive an airdrop at some stage. Airdrops involve blockchain-based projects and developers sending out free tokens to members of their communities as part of a broader marketing initiative.
The main idea is to send newly minted tokens to hundreds or thousands of different wallet addresses with the hope recipients will be more inclined to engage with the corresponding project – even if it’s only to learn how to cash out the free tokens into something else.
This concept is similar to finding a free discount card in your mailbox to encourage you to visit a new store in the area. However, a crypto airdrop isn’t predominantly about making the recipient spend money but rather raising awareness for new projects and services.
In most cases, a crypto airdrop is issued to users in exchange for completing a certain task. These tasks often involve things such as:
Following an account on social media.
Sharing or retweeting one of their posts, including hashtags.
Sending or receiving a transaction (using a particular crypto platform or wallet).
Creating an account and signing up to receive updates.
There are also instances when a crypto airdrop may be issued to users without needing to do anything, as we will highlight in the following story.
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The announcement substantially raises the total FTX has recovered since filing for bankruptcy last year but it’s still short of what customers are owed in total.
The firm sold about $5 million of Silvergate Capital shares.
Disclaimer: The information contained in this newsletter, and any information linked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. You should seek additional information regarding the merits and risks of investing in any cryptocurrency or digital assets.
