Well, it certainly looks like “crypto,” sometimes called cryptocurrency or digital currency, is having its moment. And I’ve received a whole slew of questions about investing in it, because it would be a shame to miss out.

Before I even get going here, I want you to know that if you are invested in an S&P 500 Tracking Index, ETF, or Mutual Fund anywhere in your portfolio, you are already participating in crypto. You are participating because there are companies represented within this index that hold and invest in crypto themselves. They may have direct treasury investments in digital assets, partner with crypto firms, or participate in the underlying blockchain technology. These include: 

• MicroStrategy (MSTR) 

• Block, Inc. (SQ) (formerly Square) 

• Coinbase Global, Inc. (COIN) 

• Tesla, Inc. (TSLA) 

• NVIDIA Corp. (NVDA) 

• Advanced Micro Devices, Inc. (AMD) 

• Microsoft Corp. (MSFT) 

• Visa, Inc. (V) 

• Mastercard Inc. (MA) 

• PayPal Holdings (PYPL) 

• Bank of New York Mellon (BNY) 

• JPMorgan Chase & Co. (JPM) 

• Apple Inc. (AAPL) 

• Alphabet, Inc. (GOOGL) 

So, you should be satisfied that you are participating in this emerging asset class.

Onward: Do you need to buy crypto directly? Not unless you want to. Will your Financial Planner want to put it into your portfolio? Not. So. Fast.

Crypto assets are highly volatile. As an asset class, nobody is certain how it behaves and whether or not there are reliable market drivers for its movement. It’s highly speculative. But the “Crypto Bros” love risk, right? And they are being rewarded right now by the expectation that the incoming administration will be really good for crypto.

Here's the truth: In the long term, the future of crypto is bright no matter who is in the White House. Perhaps there’s more of a bump with a Republican administration that would not be too heavy-handed regulating it. But it does not make a difference in the end.  

Crypto is coming.

Why doesn’t it make a difference? Because, for a long time, governments around the world have been looking to create Central Bank Digital Currency (CBDC) that would be a valuable tool beyond the U.S. Dollar for the Federal Reserve and the international markets. That is not going to happen overnight, and it will not happen without a U.S. regulatory framework. Right now, the U.S. Dollar has been the world’s reserve currency since World War II.  88% of all global foreign exchange transactions involve the Dollar.* What’s more, the Petrodollar, for trading barrels of oil, is based on the U.S. Dollar.

Change takes time.

Once the U.S. has a regulatory framework in place, the floodgates will open for crypto banking products. But, if you want to add a more speculative asset to your portfolio right now, there are Crypto ETFs and Digital Asset Funds for you to choose from.  

Aside: Yes, you can create a wallet at PayPal, Coinbase or others and purchase directly. This is an example of “concentration” vs. “diversification.” (See my introduction to diversification and asset classes here. One thing I’m learning, now that I am no longer compliance-bound to one brokerage, is that maintaining accounts everywhere is messy.)

Back to my statement above: A good financial advisor will tell you that crypto is speculative and is not a well-understood asset class commodity or security. Currently, it is unregulated and poses a significant threat to consumers due to a lack of regulatory protections. Thus, if you choose to invest in it, you should be investing your entertainment money only. But if that’s what you want, go ahead. 
 


Loud Financial Planning Moment:  I do not participate directly in crypto at this time, save for $25 in ETH in a “test” PayPal wallet. I’m not missing anything. My speculative money is elsewhere. 

Europe already has a regulatory framework for crypto. A lot of the money donated in the recent U.S. election was based on the fight to have more or less regulation. We can’t have NO rules. If there are NO rules, there is NO trust. Europe has Markets in Crypto Assets (MiCA), which does a good job of protecting investors and regulating stablecoins. Stablecoins, which are designed to maintain a stable value (unlike Bitcoin, which is market driven,) are backed by a reserve asset.  

This leads us back to CBDC and the U.S. Dollar as the world’s reserve. We will see what the next Congress does. But the connector between the Dollar and digital currency runs through Stablecoins. And that’s crypto.  

So, now you know that you are probably already in the game! When the kids and their families show up over the holidays, you can tell them that you have invested in crypto, and you’re poised to participate in the future of money. That’ll show the young ‘uns! #WeRescueOurselves 

If you want to learn more or have questions for me about your finances, become a subscription member of Financial & Longevity Planning in the Madrina Molly™ Community. If you’d like the company of other Women of a Certain Age(ncy), join our free Shared Wisdom discussions or take individual courses. 

* Source: Bank for International Settlements (BIS) - The BIS Triennial Central Bank Survey, which measures activity in global FX markets, reported that the U.S. dollar is involved in 88% of daily foreign exchange trading. This is the most comprehensive data available on global currency usage in financial markets. 

Copyright © Madrina Molly, LLC 2024. All rights reserved.

The information contained herein and shared by Madrina Molly™ constitutes financial education and not investment or financial advice.

Sherry Finkel Murphy, CFP®, RICP®, ChFC®, is the Founder and CEO of Madrina Molly, LLC. 

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