2021 may be the year that cryptocurrency fully enters the mainstream. According to a recent poll from Newsweek, about 46 million Americans — or 17% of the adult population — own at least a share of bitcoin. The same week the poll was published, crypto-enthusiast, and Tesla CEO, Elon Musk hosted Saturday Night Live. In one skit, he played a “financial expert” who attempts to explain cryptocurrency, including dogecoin, to comedic effect.
Whether or not Americans understand virtual currencies built using blockchain technology, they are interested in cryptos like never before. According to the same Newsweek poll, 50% of respondents said they would consider adding crypto to their investment portfolios.
Because your clients are paying attention to crypto, you should too.
Here are a few developments from 2021 that demonstrate how cryptocurrencies are gaining scale and critical mass, making them a subject worth knowing more about.
The first crypto company goes public
Coinbase Global became the first major company in the cryptocurrency space to go public in April 2021, closing its first day with a market cap of $85.5 billion. Coinbase is an exchange and brokerage platform that enables users to convert currencies like the U.S. dollar into cryptocurrencies that can be bought or sold. While the future of the platform remains to be seen, investors have taken a keen interest early on.
Tesla, Visa, and others explore accepting crypto for payment
It may be unsurprising that Musk’s company Tesla became an early adopter when it began accepting bitcoin as a form of payment earlier this year. More recently, Musk announced a pause in accepting bitcoin payments, due to concerns about the use of fossil fuels in bitcoin mining and transactions.
Other companies are also exploring cryptocurrency payments. Visa recently announced that it would allow use of the cryptocurrency USD coin to settle transactions on its payment network. Firms, including BNY Mellon and Mastercard, announced steps to make more use of cryptocurrencies for investment and payment purposes.
Federal Reserve working toward digital dollars
Around the world, countries have been exploring central bank digital currencies. China launched the digital yuan last year. In the United States, the Federal Reserve is taking a cautious approach, as it works with Massachusetts Institute of Technology (MIT) on developing a digital dollar.
The Boston Fed and MIT could unveil prototypes in the third quarter of 2021. In a recent interview, Fed Chair Jerome Powell said that there are many “subtle and difficult” policy and design choices to be made about the digital dollar, which could have potential to change the way Americans use currency.
Already a busy year in cryptocurrency news, 2021 is likely to hold more developments. It’s important to continue keeping an eye on how crypto may be part of clients’ financial futures. Use FundVisualizer now to evaluate your clients’ non-crypto portfolio.
The views and opinions expressed are those of the author, are subject to change with market conditions, and are not meant as investment advice
Putnam Retail Management.