How Financial Advisors Can Navigate Crypto’s Turbulent Waters
(Towfiqu Barbhuiya/Unsplash)
We continue to live through crypto history. Regulators recently moved aggressively forward with some majorinitiatives in the cryptocurrency space. There’s a lot to unpack there, and I won’t get into the specifics, but overall, the developments give the industry a chance to have meaningful discussions with the SEC about the future of crypto. A courtroom is a type of forum, and it might be the platform the industry needs to move forward.
In some ways, it’s expected. Crypto investors had a rough 2022: Faced with the inevitable growing pains of early-stage innovation and the shameless opportunists that always appear in emerging industries, many felt the effects of mismanaged funds and elite fraud. Bankruptcy hearings echoed with voices of investors who’d kept all of their metaphorical eggs in one basket, revealing to the courts that millions of dollars were lost in yield-bearing cryptos that they’d left sitting in one failed exchange. While it appears the industry has found its footing, the SEC may feel once bitten, twice shy.
But the question remains: How do we guide clients through these turbulent times? The most recent lawsuits served by the SEC don’t seem to have cooled interest from investors in digital assets. Far from it: we see on-chain traffic flocking to DeFi protocols that support staking and decentralized trading.
Securities vs. Commodities: Why It Matters For Crypto
(Mark Van Scyoc/Shutterstock)
Securities and commodities are two very different financial instruments and in the U.S., are regulated by two different government organizations. When it comes to cryptocurrencies, a legal determination that a cryptocurrency is either one of those financial instruments has wide-ranging implications about how it can be sold, where it can be listed and who might sue if an issuer oversteps the mark.
The matter is far from decided, and given the breadth of the crypto market, it is likely that there won’t be a one-size-fits-all decision, but will vary depending on the token.
In this article, we will try to explain the differences between securities and commodities and explore the ongoing debate about whether or not cryptocurrencies should be classified as one or the other.
Financial heavyweights including Charles Schwab (SCHW), Citadel Securities, and Fidelity Digital Assets announced the start of cryptocurrency exchange EDX Markets, the latest evidence Wall Street is forging ahead in digital assets despite the crypto winter.
Nomura’s global survey shows that commitment to digital assets remains strong outside the U.S., offering a way forward for the sector, says Michael Casey.
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.
