Sarson Funds, Inc.
The recent down cycle in cryptocurrencies may end up doing more good than bad.
On the bad side, several massive crypto projects and investment firms have gone belly-up in the last few months—but even these failures have yielded positive results, according to Jahon Jamali, co-founder of Sarson Funds, a crypto investment and educational firm oriented towards financial advisors.
“There’s a lot of garbage being cleaned out of the market,” said Jamali. “Overall, though, were seeing continued growth in the space across many metrics. I think this shows crypto’s staying power.”
One metric where Jamali is seeing significant growth is demand for education and information—but this is not unusual during a downturn in token prices.
During the last “crypto winter” when major tokens lost most of their value, demand for education increased, said Jamali. “In crypto, every time it exposes a lack of supply in quality education and information.”
This is important for financial advisors, who are expected to be able to competently answer their clients’ questions both as a matter of compliance and consumer expectations, said Jamali.
Jamali cited responses from two surveys to show the dangerous disconnect between advisors and their clients in crypto, one from BitWise and the other from ETF Trends. The former found that 94% of advisors reported receiving questions about cryptocurrency from their clients in the past year. The latter found that only 10% of advisors this year eel knowledgeable about cryptocurrency.
“So here is a question that essentially every advisor is being asked but only 10% feel knowledgeable enough to answer,” he said. “Advisors need to understand what their clients are asking about and all the investment options that are out there.”
Why Now?
The U.S. is slowly moving down the path towards regulatory clarity, said Jamali, and a lot of venture capital and institutional investors are poised to enter the market when additional clarity is achieved.
In fact, Jamali expects some semblance of a regulatory framework for cryptocurrency in the U.S. come into being before the end of this year. A coordinated federal review of crypto, triggered earlier this year by a presidential executive order, should result in policy proposals and draft legislation as early as the fall.
“Now is a great time to come get this education,” said Jamali. “What a lot of people don’t always grasp is that digital assets won’t just be bitcoin and ethereum and so on and so forth. We’re going to see other asset classes tokenized, and other types of traditional markets and publicly traded firms incorporated on the blockchain in different ways.”
In other words, the technology that makes cryptocurrencies trade in real-time, 24 hours a day with no intermediary but code, will not be isolated in alternatives much longer. It is coming to more asset classes, said Jamali, and may spawn additional new asset classes itself.
There will also be additional ancillary products, like more derivatives, options and futures around more altcoins, and more ETFs representing a broader spectrum of the crypto and blockchain universe. More of the large-cap and mega-cap technology sector will be represented by companies making entries into the blockchain space, or eventually, companies native to the space.
That should increase advisors’ sense of urgency about getting educated.
“You need to understand because if you’re holding in your portfolio Meta or Amazon or Alphabet or Google or any of these other types of large technology companies, you’re going to be impacted by the metaverse,” said Jamali. “The first domino after there’s regulatory clarity is that a spot bitcoin ETF will be approved, and then we’re going to see a flood of other types of product structures on and off the blockchain.”
Talking Crypto
The wealth management space, in general, is late to the blockchain discussion. Crypto enthusiasts have been talking about the technology for over a decade, mostly among themselves, and have developed their own language.
At the same time, the cryptocurrency space has been inundated with opportunists trying to take advantage of the gold rush of quickly rising asset values by hawking haphazardly constructed projects, poorly managed products and avaricious risk-taking.
“There has been a gap in communication between the crypto blockchain community and Wall Street and the traditional investment community,” said Jamali. “From the crypto community side of things, you’re getting a lot of craziness in terms of crypto information. On top of that, the good stuff is still highly technical. It circulates in developer communities, not the investment community.”
That’s why Sarson took an educational approach that should be familiar and comfortable to advisors, modeling their programs after the credentialing and continuing education programs that the industry, where possible partnering with existing programs to offer CE credits.
That way, learning about crypto becomes another part of an advisor’s training, said Jamali—as he thinks it should be.
“We’ve come to find that program structures like that, that resemble traditional CE education, it’s what is most appealing to advisors and compliance officers,” he said. “They need to maintain certain training schedules, with well-organized courses it’s much easier to keep track of. We offer certifications for financial advisors, and I think we’re the only ones who offer that certification as an NFT.”
Sarson also provides advisors with assistance and resources to help educate their clients and discuss blockchain-related topics.
The education Sarson provides should be enough to empower advisors to cut through all of the bad information and misinformation on the internet about cryptos and do their own research should they want to do a deeper dive into the asset class, said Jamali.
“A lot of great research on crypto and blockchain still comes out from the early adopters,” said Jamali. “Beyond that, Fidelity comes out with great reports, keep an eye out for those and Bank of America is active in the space as well. Those types of institutional reports don’t come out often, but when they do they are really information-rich. Lean on folks like us for the fundamental education, because there’s so much out there, and now we’re getting professional-grade research.”
