While Bitcoin (BTC) continues to gain traction in financial circles, it is developing countries that are leading the way in its adoption. As a $1.5 trillion asset manager, Franklin Templeton, believes BTC will become indispensable for national treasuries in the future. Sandy Kaul, the investment firm’s Head of Digital Asset & Investor Advisory Services, recently shared her insights on Bitcoin adoption, highlighting its potential impact on investor portfolios, technology stack, and global economy.
According to Kaul, BTC presents an attractive opportunity for less developed nations to level the playing field with larger economies. By harnessing the power of Bitcoin, these countries can consolidate their buying power and compete on a “more equal playing field.” As such, Kaul anticipates an increasing number of developing countries adopting Bitcoin as a strategic tool.
Kaul predicts that it will become imperative for all national treasuries to hold Bitcoin in their reserves. The decentralized nature of BTC allows for more seamless facilitation of transactions, making it an ideal tool for various aspects of government business. While Central Bank Digital Currencies (CBDCs) may enhance cross-border trade efficiency, they remain vulnerable to national exchange rate risks. In contrast, Bitcoin’s borderless nature positions it as a cornerstone for international trade. Consequently, Kaul asserts that every country should allocate a portion of their reserves to Bitcoin to facilitate efficient conversions.
Kaul expects Bitcoin to gradually integrate into the traditional banking system, becoming a fundamental component of the financial industry. Its adoption by governments and financial institutions will solidify its position as a trusted and reliable asset. Franklin Templeton itself is actively seeking approval to launch a Bitcoin spot ETF (Exchange-Traded Fund) in the United States. As regulatory bodies become more receptive to such investment products, it is highly likely that Franklin Templeton will secure approval in early 2023.
BTC’s performance as an alternative asset class is commendable, even when accounting for the volatile market conditions witnessed during the “crypto winter.” Kaul cites Bitcoin as one of the best-performing asset classes in the past decade. Its inclusion in investment portfolios can offer superior risk-adjusted returns and diversification benefits. Looking ahead, Kaul envisions a future where cryptocurrencies, including Bitcoin, will act as loyalty programs, unlocking an array of exclusive benefits for investors and spenders.
Bitcoin adoption is gaining momentum, with developing countries at the forefront of this financial revolution. As Bitcoin continues to demonstrate its potential as a strategic tool, it is only a matter of time before every national treasury requires a BTC reserve. The integration of Bitcoin into traditional banking systems is poised to lay a solid foundation for the financial industry’s future. As investors and institutions recognize the benefits of diversifying portfolios with Bitcoin, its status as a top-performing asset class further solidifies. With the potential to unlock a new world of benefits, Bitcoin’s pioneering journey promises to reshape the global financial landscape.