Crypto for Advisors: Digital Assets in 2024

Welcome
to
2024!

If
you
follow
the
market
news
about
bitcoin,
you
will
have
seen
the
price
increase
at
the
end
of
2023
in
anticipation
of
U.S.
approval
of
spot
bitcoin
ETFs.
Applicants
had
until
Dec.
29
to
update
their
applications
with
the
SEC
in
anticipation
of
possible
approvals
in
early
January.

Are
you
ready
to
answer
client
questions
about
this
asset
class?
Are
you
familiar
with
direct
ownership
vs
ETF
ownership?

The
Crypto
for
Advisors
newsletter
is
committed
to
providing
industry
news
to
support
advisors
in
navigating
this
asset
class.
In
this
issue,
CoinDesk’s

Kim
Greenberg
collaborated
with

Adam
Blumberg,
co-creator
of
the
Certified
Digital
Asset
Advisor
course,
and

DJ
Windle
from

Windle
Wealth
to
provides
a
guide
to
getting
started,
cutting
through
the
noise
and
disinformation
prevalent
in
the
space,
and
simply
helping
you
begin
your
learning
journey.
Happy
reading.

You’re
reading


Crypto
for
Advisors,
CoinDesk’s
weekly
newsletter
that
unpacks
digital
assets
for
financial
advisors.


Subscribe
here

to
get
it
every
Thursday.

With
a
spotlight
on
bitcoin
and
other
digital
assets,
a
looming
U.S.
spot
bitcoin
ETF
approval
and
rising
client
interest,
it
may
be
time
to
start
considering
adoption
for
your
practice.
We
understand
that
there
is
much
to
learn,
especially
when
digital
assets
are
only
part
of
a
broader
portfolio
of
client
assets.
We’ve
got
you
covered
if
you
haven’t
started
learning
about
crypto.
Here
are
five
digital
asset
fundamentals:

1.

What
is
Bitcoin?

Bitcoin
(BTC)
is
the
world’s
first
decentralized
cryptocurrency,
using
blockchain
technology
to
secure
and
verify
transactions.

Let’s
break
that
down:

The
bitcoin
protocol
was
created
to
have
a
total
of
21
million
coins;
once
the
amount
of
coins
in
circulation
reaches
that
number,
the
protocol
will
stop
minting
new
coins.
A
feature
of
the
Bitcoin
software
is
that
it
uses
a
coin
creation
method
known
as
“bitcoin
halving.”
This
ensures
the
amount
of
bitcoin
distributed
to
miners
as
rewards
reduces
over
time
(though
transaction
fees
could
still
increase).
A
bitcoin
halving
(sometimes
called
“halvening”)
happens
every
210,000
blocks,
occurring
roughly
every
four
years,
with
the
next
event
set
in
April
2024.
At
that
point,
the
bitcoin
creation
will
go
from
6.25
new
bitcoin
every
10
minutes
to
3.125.
By
gradually
decreasing
the
supply
of
new
bitcoin
entering
circulation,
the
theory
is
that
the
limited
supply
of
the
asset
should
help
support
its
value.

Now
let’s
explore
bitcoin’s
performance
relative
to
other
asset
classes,
shown
in
the
table
below.
Important
items
to
note:

For
more
on
bitcoin,
the

Bitcoin
Infographic
from
Deloitte
is
a
good
resource
to
showcase
additional
bitcoin
basics.

2.

Understanding
the
Regulatory
Landscape

The
global
regulatory
approach
towards
bitcoin
and
digital
assets
exhibits
significant
variation,
reflecting
the
diverse
perspectives
on
this
innovative
technology.

United
Arab
Emirates
(UAE):
The
UAE
showcases
a
forward-looking
stance
towards
blockchain
and
cryptocurrencies.
It
has
established
a
clear
regulatory
framework
that
fosters
the
growth
of
crypto-based
businesses
and
exchanges,
positioning
the
UAE
as
a
potential
central
hub
for
digital
asset
activities.

European
Union
(EU):
The
EU
has
taken
a
structured
approach
with
its
comprehensive
regulations
named
the
Markets
in
Crypto-Assets
(MiCA).
This
framework
aims
to
safeguard
consumer
protection
and
financial
stability
within
the
crypto
market,
indicating
a
cautious
yet
organized
regulatory
mindset.

Hong
Kong:
Hong
Kong
has
also
moved
towards
providing
more
clarity
in
crypto
regulations,
fostering
a
safer
and
more
transparent
environment
for
digital
asset
transactions.

United
States
(U.S.):
The
regulatory
environment
in
the
U.S.
is
characterized
by
its
complexity
and
delayed
progress.
Without
a
unified
federal-level
regulation,
the
management
and
trade
of
digital
assets
remain
uncertain.
Political
views
on
cryptocurrencies
vary
widely,
with
some
seeing
them
as
essential
for
economic
freedom
and
others
expressing
concerns
about
their
potential
misuse
due
to
anonymity.

The
U.S.
is
currently
considering
the
approval
of
a
spot
bitcoin
ETF
and
is
developing
guidelines
for
the
issuance
and
use
of
stablecoins.
The
judiciary
has
suggested
that
comprehensive
cryptocurrency
regulations
should
originate
from
Congressional
legislation
rather
than
SEC
enforcement
actions,
underscoring
the
need
for
clear
and
well-defined
laws.

This
array
of
regulatory
attitudes
underscores
the
dynamic
nature
of
the
cryptocurrency
world.
As
digital
assets
continue
to
gain
prominence,
the
creation
of
cohesive
and
effective
regulatory
frameworks
will
be
pivotal
for
their
sustainable
integration
into
the
global
financial
system.

3.

There’s
more
than
bitcoin.

While
bitcoin
is
really
its
own
animal,
the
rest
of
the
crypto
ecosystem
jumped
on
the
idea
of
a
decentralized
network
to
create
additional
blockchains.
Over
time,
the
share
of
bitcoin
in
total
market
capitalization
has
declined,
and
other
cryptocurrencies
have
established
themselves
as
market
players,
though
bitcoin’s
value
currently
represents
more
than
that
of
all
other
digital
tokens
combined.

As
trends
in

crypto
global
market
cap
will
tell
us,
other
digital
assets
are
emerging
and
some
analysts
say
the
world
will
need
a
broad
based
digital
asset
benchmark
that
includes
–
but
isn’t
limited
to
–
bitcoin.

The
global
cryptocurrency
market
cap
today
is
$1.81
Trillion.
As
cryptocurrencies
tend
to
lead
headlines,
broadly
speaking,
other
types
of
digital
assets
include
non-fungible
tokens
(NFTs),
stablecoins,
central
bank
digital
currencies
(CBDCs)
digital
bonds
and
tokens.

4.

Classification
and
Vernacular

As
the
broad
spectrum
of
digital
assets
grows,
how
does
one
categorize
this
sprawling
and
ever
evolving
landscape?
Several
institutions
have
attempted
to
classify
digital
assets,
similar
to
the

MSCI
GICS
framework.

One
such
framework
is
the

Digital
Asset
Classification
Standard
(DACS),
created
by
CoinDesk
Indices.
DACS
provides
digital
asset
and
crypto
taxonomy
with
reliable,
comprehensive
and
standardized
industry
definitions
and
classifications
for
digital
assets.
Other
frameworks
include:
The

Goldman
Sachs,
MSCI,
and
Coin
Metrics
Datonomy,

the
Digital
Asset
Taxonomy
System
(DATS)
by
Wilshire,

A
Taxonomy
of
Digital
Assets
by
Milken
Institute
and
others.

Using
a
classification
framework
to
shape
and
classify
digital
assets
can
facilitate
portfolio
attribution
analysis
and
help
pinpoint
investment
opportunities.

Along
with
classification
is
understanding
crypto
vernacular,
which
can
be
daunting.
While
there
is
no
“centralized”
vocabulary,
several
firms
have
created
glossaries
to
help
understand
the
terminology.
For
crypto
terms,
the

Grayscale
Glossary,
the

CoinDesk
Glossary,
and
the

AmiLearn
Glossary
are
fantastic
resources.

5.

Implementation:
5
Steps
to
Consider

In
today’s
rapidly
changing
financial
world,
embracing
digital
assets
is
becoming
more
of
a
necessity
than
a
choice
for
financial
professionals.
Here’s
a
friendly
guide
to
help
you
weave
cryptocurrencies
and
other
digital
assets
into
the
fabric
of
your
financial
practice.

Educate
Yourself
and
Network:

Client
Education
and
Market
Research:

Compliance
and
Legalities:

Advise
on
Investment
Options:

Custodian
Partnerships:

By
implementing
these
steps,
financial
professionals
should
be
able
to
effectively
integrate
digital
assets
into
their
practice,
offering
comprehensive
services
that
combine
innovative
solutions
with
thorough
compliance
and
client
education.

In
conclusion:

Cryptocurrency
ownership

continues
to
grow
with
the
U.S.
lagging
behind
several
countries.
With
widespread
global
interest,
regulations
are
evolving,
and
adoption
is
growing.
Institutions,
asset
owners
and
asset
managers
are
launching
differentiated
products,
classification
systems,
broad-based
benchmarks
and
educational
resources
to
further
crypto
adoption.
There
are
many
tools
to
aid
with
understanding
and
practice
management.
It’s
just
a
matter
of
getting
started.

We
are
looking
forward
to
an
exciting
year
in
digital
assets.
As
this
newsletter
is
intended
to
help
advisors
grow
their
knowledge
and
business,
we
encourage
you
to
reply
to
this
email
with
comments,
questions
and
topics
you’d
like
to
see
addressed
for
2024.

We’re
also
excited
to
announce
that
those
who
are
looking
to
complete
the
Certified
Digital
Asset
Advisor
(CDAA)
course,
with
a
one
year
learning
subscription
upon
registration
and
appropriate
qualification
of
a
CRD
(or
foreign
equivalent)
may
qualify
for
a
free
Pro
Pass
to

Consensus
valued
at
$1,149.
Visit
the

registration
page
to
sign
up
or
learn
more.

Jamie
Dimon
testified
before
Congress
and
stated,
“If
i
were
the
government
I’d
shut
crypto
down.
Four
days
later
Dimon’s
firm,

JPMorgan,
is
listed
to
play
a
key
role
in
BlackRock’s
spot
bitcoin
application.

Crypto
ETF
applicants
were
given

until
Dec.
29
to
update
filings.

What
if
the

SEC
doesn’t
approve
the
spot
bitcoin
ETFs?