I’d say some projects are more transparent than others, but even those projects that do disclose information about themselves or their experience, their partners and customers without registering, there isn’t necessarily anyone to verify that any of their claims are true.
The blockchain is very transparent as to certain limited types of data. So for example, time and number of transactions and the addresses of those who transacted — all perfectly transparent. But it doesn’t reveal the identities of those who are transacting or for that matter, any other arrangements or connections they may have off chain.
And I think it’s just a reminder that compliance is more than a legal obligation. It’s a market good that improves confidence and resilience and allows for more accurate pricing.
The SEC has had a number of [bitcoin ETF] applications but hasn’t said yes to any of them as yet. Tell us your thoughts about the potential for that. Is there going to be a bitcoin ETF one day or should investors just stop asking?
I can’t talk about too much of the internal deliberations of the Securities and Exchange Commission. So I will just say that we will have to see what all the applications say.
One final question. What is it you’re optimistic about in the area of crypto and what is it you’re pessimistic about?
Some optimism: I think removing intermediaries has the potential to reduce errors and costs for retail investors. I think there’s a lot of research and development efforts underway and the potential is there for this to really improve elements of investing or commerce in ways that we haven’t even yet considered. That’s a really critical part of this.
I don’t know where this is going, but I think there’s really some interesting and cool opportunities. It may be that we’ve not yet settled on crypto’s killer app, but the lessons being learned today will allow us to better harness that when it appears so.
Concerns: Unless and until I think we can have a market where people have some basic information about these tokens, these platforms, these projects, we’re not going to be able to evolve and grow as much as we would like, because there’s always going to be that question about fraud, accuracy, and how we get to market adoption. I think we need some really basic fundamental protections like the SEC has put in place for every other security.
Ric Edelman is an author and founder of RIA Edelman Financial Engines (earlier Edelman Financial Services). He now leads the Digital Assets Council of Financial Professionals, or DACFP, which recently formed a strategic partnership with the Financial Planning Association to provide educational programming and content to help FPA members understand the complexities of cryptocurrencies and how these issues can affect their clients’ financial plans.
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