Developing Countries Embrace Bitcoin
According to Franklin Templeton, a $1.5 trillion asset manager, developing countries are increasingly adopting Bitcoin (BTC) as it allows them to compete with larger economies on a more level playing field. Sandy Kaul, the investment firm’s Head of Digital Asset & Investor Advisory Services, believes that BTC will eventually become an essential asset for all national treasuries due to its ability to facilitate efficient cross-border trade and conversions. While Central Bank Digital Currencies (CBDCs) may also improve cross-border trade, they are still subject to national exchange rate risks. In contrast, BTC can serve as the base unit of international trade.
Bitcoin Offers Diversification Opportunities
Franklin Templeton is among several applicants vying for a Bitcoin spot ETF in the US. With regulators becoming more open-minded about this product, approval for launch is expected in early 2024. By offering BTC exposure through an ETF wrapper, the fund aims to make it easier for investors to include Bitcoin in their portfolios. Kaul emphasized that BTC has been one of the best-performing asset classes in the past decade, even during “crypto winter.” As an alternative asset class, BTC provides diversification and can offer better risk-adjusted returns.
Crypto’s Future Benefits
Kaul envisions that over the next 5 to 10 years, cryptocurrencies will unlock various benefits for investors and spenders alike. She believes that money in accounts and portfolio investments will act as loyalty programs, providing access to a range of advantages.
Hot Take: Bitcoin Adoption Continues to Expand
Franklin Templeton’s Sandy Kaul predicts that Bitcoin adoption will continue to increase, particularly in developing countries looking to level the economic playing field. Additionally, she suggests that all national treasuries will eventually need to hold BTC to facilitate more efficient cross-border trade and conversions. As regulators become more receptive to Bitcoin ETFs, Franklin Templeton and other applicants are expected to launch their products in the near future. This will provide investors with easier access to BTC and the potential for diversification in their portfolios. In the coming years, cryptocurrencies are expected to unlock various benefits for both investors and spenders, transforming traditional financial systems.
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