CRYPTO

Bitcoin 2022 & Monetary Independence

I may be in Miami a week after Bitcoin 2022 happened, but the most popular crypto conference is still on my mind. 

Let me be real, it’s been on my mind ever since I saw: 

1. PayPal Co-Founder Peter Thiel’s very public display of toxicity as he came at Warren Buffett, Jamie Dimon, and Larry Fink calling them and ESG the “enemy”
2. Bitcoin Is Freedom: A panel featuring the Human Rights Foundation alongside other activists who are exploring ways Bitcoin restores individual rights lost in authoritarian regimes worldwide.

Both of these sessions might make you eye-roll. Let me explain why the second one: Bitcoin Is Freedom, shouldn’t. 

Why It Matters 

I’m often asked (by others but mostly myself) why I spend so much of my fintech-focused platform on crypto stories. Bitcoin’s ability to bring more financial freedom and equity to people across the world is why. 

That reasoning has, unfortunately, become somewhat of a cliché. But how could people ever believe that Bitcoin is more than yacht parties and billionaires battling egos if media co’s are spending more of their time reporting what Peter Thiel yells and not enough on what Yeonmi Park has experienced? 

Bitcoin has the power to represent so much more than billionaires yelling at each other to make headlines or rich people moving wealth.

It’s a tool of empowerment in a world where there are populations that don’t have accessible financial systems, stable reserve currencies, and are controlled by governments with zero human rights. 

Bitcoin enables individuals worldwide to find freedom because anyone can use it, irrespective of race, gender and power status, and no one can stop it or control it.

This concept may seem like a small impact in America where most of the Bitcoin chatter is around gains and bro talk. But across the country, access to decentralized financial systems can mean life or death. 

Here’s the Story

During Bitcoin 2022, the most important panel featured Human Rights Foundation’s (HRF’s) chief strategy officer Alex Gladstein, Palestinian democracy advocate Fadi Elsalameen, Togolese human rights activist Farida Nabourema, and North Korean defector and activist Yeonmi Park.

Yeonmi opened up about her experiences fleeing from her home country, North Korea. When trying to escape, a lot of women end up in China and are captured as “sex slaves” by men that use them to have children (she said around 300,000 women are experiencing this in China right now). 

Once these women have children, she said, the Chinese Communist Party doesn’t issue them an ID document because they don’t recognize them. And the children are left stateless, also not recognized or legalized by either country. 

Those kids are left without access to education, IDs, and definitely not a bank account. “There’s a way we can empower these women and children with bitcoin,” she said. 

Bitcoin has been the only way to send over money to the underground groups who work to give these children an education, hoping to prevent their trafficking and give them a better life. 

In Togo, a West African country, the government has been ruled by the same family for five decades. In 1964 and 1969, the French government reduced the value of Togo’s currency in half.

“As a result, you have over 50% of the population in these countries living under extreme poverty. Independence without monetary independence means nothing,” said Farida. 

Farida is working with HRF on education programs that teach the power of Bitcoin so people can fight the regime anonymously. 

In Palestine, people can use Bitcoin to fight back peacefully in a place where corruption and inefficiencies plague the governmental and financial institutions, Fadi explained. He’s working with the open source Bitcoin project SeedSigner to bring hardware wallet devices to Palestinians.

“If today I want to wire money to my mom who lives in Lebanon, I have to worry about many regulatory issues, it’s not very simple,” he said. “The more I learn about Bitcoin, the more I realize if someone can be their own bank with Bitcoin, I’d rather use Bitcoin.”

The next time someone asks (or you question) why crypto assets are meaningful to the bigger picture narrative of the world. Zoom out. Let go of the America bubble we are in and remember that our brothers and sisters across waters can change their lives with this technology. 

We have to support that. 

To learn more and help support HRF’s Bitcoin development fund, click here. 

VENTURE

Clocktower Makes Venture Values-Based

I fundamentally believe that our values are the drivers of our success. When we work with a partner in any capacity, our values have to match up in order for it to work. 

When you match your personal values to the values of a company there is synergy, purpose, and engagement. I think this is true for the venture capital 🤝 fintech founder/company relationship. 

Enter Clocktower Technology Ventures, a VC that invested in fintech companies like Chime and MoneyLion when they were considered early-stage (now they’re worth ~$35B and $2.9B, respectively). 

Clocktower Principal Adriana Saman calls the VC a “collaborative co-investor,” instead of thinking of themselves as shareholders. Here’s what that means. 

Clocktower never takes board seats, they never lead rounds, and they always have daily interactions with founders instead of forced quarterly check-ins. 

This strategy has allowed the VC to have more than 148 investments and allows fintech founders to tap into a unique relationship with VCs. It’s a more friendly relationship where communication is constant, and collaboration is encouraged. 

The most important part: Clocktower operates by placing authenticity of founders first, and then believes market size and expansion follows. (Strategy sure working with fintechs like Chime). 

Why It Matters

Just 1% of the $70 trillion wealth management industry is controlled by women or minority fund managers. The impact? Female and underrepresented founders receive far less investment.

I had the pleasure of getting to pick Adriana’s brain to learn about the areas of fintech she’s most interested in (giving us some key insight into the next wave of fintech investments).

1. Most underrated fintech trend: Real-time payments. “It’s underrated because it sets the stage for faster, better, more reliable financial services on top of it.”
2. Most excited about for the future: Consumer tech and highly customized financial services. 
3. Most interested region: Latin America.

You can watch or tune in to my full interview with Adriana here and here. 

WEALTH MANAGEMENT

Advisors Are Thirsty for a Spot Crypto ETF

A new Nasdaq survey of 500 financial advisors who are currently or considering allocating to crypto, found that 72% of advisors would be more likely to invest client assets in crypto if a spot ETF product were offered in the United States.

Spot crypto ETFs already exist in countries like: 

1. Canada: has several crypto-focused ETFs trading on the Toronto Stock Exchange with billions of dollars in assets under management.
2. Germany and Switzerland: investors are flocking to physically backed exchange-traded products (ETPs). The 21Shares bitcoin ETP is 100% exposed to spot BTC and is listed on both the Swiss Exchange and several German exchanges — nearing half a billion dollars in AUM.

But advisors are not so confident that a spot crypto ETF will be approved this year in the US. Bloomberg Intelligence analysts say the approval is likely to come in 2023. 

Why It Matters

I remember heavily covering the relationship between advisors and crypto allocations for their clients’ portfolios a year ago. 

Hype from retail and institutional investors on digital assets wasn’t enough at the time to sway skeptical advisers. I even had an advisor tell me it’s the ‘Seinfeld’ show of investments: a currency about nothing.

But it has been a helluva transformative year. 

The trickle down effect here is key. With digital assets once the retail investors make it popular on mainstream then → crypto floods headlines → ultra-high-net-worth investors are interested → institutional adoption → regulation → mass adoption. 

Arguably, the underlying technology of cryptocurrencies — the blockchain — should make advisors feel safer about digital assets, given that the digital ledger is immutable.

Bitcoin advocates say Bitcoin and blockchain should be looked on as technologies that are worth investing in depending on a client’s profile, rather than as a fluctuating asset based on price.

But that requires education on the advisor front. Something the industry is still working toward. I even flew to Miami to sit down with Ric Edelman to discuss how advisors can communicate digital assets and retain clients. 

By the Numbers 

For advisors already investing in crypto: 

• 86% expect to increase their allocations over the next 12 months
• 0% plan to decrease allocations
• Of that same group, 50% already use Bitcoin futures ETFs
• 28% plan to start using them in the next 12 months 

Advisors, on average, said their ideal crypto allocation is 6% of a client’s total portfolio. (If you really want to have some fun, check out Mr. Wonderful talking about his increased allocations — although, I don’t think we should be everything millionaires/billionaires do). 

“The vast majority of advisors we surveyed either plan to begin allocating  to crypto or increase their existing allocation to crypto,” said Jake Rapaport, Head of Digital Asset Index Research at Nasdaq.

“As demand continues to surge, advisors will be  looking for an institutional solution to the crypto question that now dominates client conversations.” 

Crypto adoption is highest among:

• Registered investment advisors (RIAs), with 34%  of RIAs using crypto compared to 19% of independent broker-dealers (IBDs) and 17% of wirehouse  advisors.
• About half of RIAs (49%) report that compliance rules and restrictions are a barrier to crypto investing, compared to 78% of advisors in all other channels. 

But confidence in understanding crypto assets is low — only 10% of advisors said they are very knowledgable about crypto, and 9% feel very confident in their ability to advise clients on crypto. Virtually all advisors surveyed (98%) express interest in learning more  about crypto and digital assets.

Among respondents, some 7% say that ESG is a very important consideration when determining a client’s strategy toward digital assets. 

“Crypto inflows through advisor channels show no signs of stopping, even as advisors grapple with compliance considerations and look for guidance from educational materials from other industry  participants, including asset managers and index providers,” added Rapaport.

“We expect ESG and  crypto considerations to converge as investors continue to direct assets into both.” 

WTF ELSE?

• Plaid taps Booking.com veteran to lead its European expansion  
• Tive, a startup developing supply chain visibility tools, raises $54M
• Fintech startup iTribe raises $1M in funding
• Startups join AI acquisition rush
• Ellevest raised a $53M Series B
• LatAm fintech platforms transform investing for the future
• 4 questions to ask for bank-fintech partnership success
• Bored Apes go Hollywood with Coinbase-produced movie trilogy
• Vested Finance, a platform to let Indian investors access the US stock market, raised a $12M Series A
• Fintech Voyager raises $210M to become 2nd Philippine ‘unicorn’