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What Biden’s Comprehensive Crypto Review Means for Advisors

According to industry observers and leaders, President Joe Biden’s comprehensive executive order reviewing cryptocurrency and its regulation should be a reassuring move for financial advisors as well as intermediaries to legitimate advocates of financial services and products.

“Traditional wealth managers” have been left out of the cryptocurrency space, said Wally Okby, strategic advisor in the Wealth Management Division at Eight-Novarica Group. “President Biden’s executive order is a great first step toward safely leveling the playing field.”

Biden signed the executive order on Wednesday, calling for a comprehensive cryptocurrency review that will address consumer and investor safety, financial stability and even national security. The order lays the foundation for federal regulation of digital assets, citing the need to combat threats such as crime, sanctions and terrorism.

Because traditional money managers have to deal with risks such as client suitability, custody and market manipulation, they are late in the game, OKB said. “As a result, private clients interested in the space have funneled billions of dollars into cryptocurrency—outside the scope of their wealth managers—on exchanges and other challenger (non-traditional) direct-to-consumer digital-first platforms such as Robinhood, PayPal and Through. Others.”

The OKB predicted significant progress “in the short term” towards “establishing a regulatory framework”.

This move will not only help investors and individual wealth managers. He said that family offices also benefit. “Some US-based wealth managers will rapidly advance their digital asset agenda, which is what I anticipate coming forward,” OKB said. Business models and wealth management approaches to digital assets will experience “meaningful changes” as portfolios incorporate larger allocations to digital assets.

At least one supplier of crypto-related technology to Intermediate also said the order is a positive development.

Ben Cruikshank, Chief of Florish, said: “While the executive order represents an extremely high-level approach, the resulting change will take time, we believe the advisory takes today’s actions as a more positive sign.” Will see that cryptocurrency is here to stay.” , a subsidiary of MassMutual that provides a crypto platform for the RIA called FlorishCrypto. Consultants should “feel more comfortable stepping off the edge, assuming they are acting in a prudent manner, [compliant] and a regulatory-first approach.”

Over the next six months, federal agencies will produce a report that outlines “the conditions that will lead to the mass adoption of a variety of digital assets and how such developments can be expected for consumers, investors, and businesses in the United States.” risks and opportunities,” according to Biden’s directive to the Treasury Department and the Labor Department to work with the SEC and federal banking agencies to compile several sections of the report, including policy recommendations and potential regulatory and legislative actions.

According to the order, “increased use of digital assets in financial activities increases the risk of crimes such as money laundering, terrorist and proliferation financing, fraud and theft schemes, and corruption.” “These illegal activities highlight the need for ongoing investigations into the use of digital assets, the extent to which technological innovations may affect such activities, and the extent to which these illicit activities may be undertaken through regulation, supervision, public-private engagement, oversight and law enforcement.” May explore opportunities to reduce

Biden is also ordering his own version of a report on the future of money and payment systems. The final report is to include a section addressing the implications of creating a United States Central Bank Digital Currency (CBDC).

The Federal Reserve System’s board of governors, after conducting their study, released a paper on the so-called “digital dollar” in January. According to a Bloomberg report, the paper “did not make any firm conclusions on whether it was prudent to issue such a currency”, which threw cold water on the idea that “a US digital dollar will be issued soon. “

The White House also directed federal agencies to investigate the economic, environmental and energy impacts of distributed ledger technology, often referred to as “blockchain” technology. Part of the report aims to address the potential for mitigating climate impacts by “the exchange of liabilities for greenhouse gas emissions, water and other natural or environmental assets”.

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