In recent years, the world has witnessed a growing lack of trust in governments and financial institutions, particularly in the wake of the 2008 banking crisis. This has led to the rise of alternative financial systems such as cryptocurrency, which promise greater transparency and decentralization. In this article, we will explore the implications of these developments for financial professionals, with insights from Adam Blumberg, Co-Founder of Interaxis.
Introduction
The banking crisis of 2008 shook the global financial system to its core, leaving many people disillusioned with the traditional banking system. Since then, there has been a growing lack of trust in governments and financial institutions, which has led to the rise of alternative financial systems such as cryptocurrency.
The Rise of Crypto
According to Blumberg, the crisis of trust in government and financial institutions has led to a discussion about the need for something like cryptocurrency, which offers greater transparency and decentralization. Crypto promises to offer a more transparent and decentralized financial system that is not controlled by any central authority. This has led to a growing number of people investing in crypto and using it as a means of payment.
The Impact on Financial Professionals
The rise of crypto has had a significant impact on financial professionals, as more and more people turn to these alternative financial systems. Blumberg notes that financial professionals should start learning about cryptocurrency and self-custody to prepare themselves to help clients in the future. Those who work in traditional banking may feel threatened by the rise of these alternative financial systems. However, there are also opportunities for financial professionals to become involved in the crypto space and provide services to those investing in or using crypto.
The Lack of Trust in Government
Blumberg observes that the growing lack of trust in governments and financial institutions has led to a discussion about the need for something like cryptocurrency. Clients may be hesitant to invest in traditional financial products or trust financial professionals who work for traditional banking institutions.
Implications for Financial Professionals
In order to remain relevant and trusted, financial professionals must adapt to these changing times. This may involve becoming more knowledgeable about crypto and alternative financial systems and providing services to those who use them. It may also involve being transparent and open with clients about the risks and benefits of traditional financial products.
Regulatory Issues
One of the challenges facing financial professionals in the crypto space is the lack of regulation. Blumberg notes that this can make it difficult to provide financial advice or offer services to clients who are using crypto. However, there are efforts underway to regulate the crypto space, which may provide more opportunities for financial professionals to become involved.
Central Bank Digital Currencies
Blumberg expresses concern about central bank digital currencies, which he believes could be used to track and control individuals’ financial activities. He argues that the lowering trust in governments makes such currencies even more alarming, as they could potentially be used to cut off access to funds with the push of a button.
Conclusion
The rise of crypto and the lack of trust in government and financial institutions have had significant implications for financial professionals. While there are challenges, there are also opportunities for financial professionals who are willing to adapt and become involved in these alternative financial systems. Blumberg’s insights highlight the importance of transparency, decentralization, and self-custody in the financial world, as well as the need for financial professionals to stay up-to-date with developments in the industry.