Asset Managers Could Violate Fiduciary Duty If They Don’t Consider Bitcoin, Says Finance Professor

by Gordon James

Asset managers have been struggling with a lack of regulatory clarity surrounding virtual currencies such as Bitcoin. The Securities and Exchange Commission (SEC) has been charged with providing oversight, but hasn’t offered much guidance. Meanwhile, the Commodity Futures Trading Commission (CFTC) is investigating several exchanges for alleged manipulation of the “bitcoin price” and has been warning of the risks associated with digital currencies. A new paper suggests that the entire industry could be vulnerable to a fiduciary duty violation if its representatives fail to consider the cryptocurrency as a potential investment.

On Thursday, September 6, 2017, the Securities and Exchange Commission (SEC) released its proposed framework to self-directed investing in alternative assets, including investments in bitcoin. The SEC’s proposed framework is part of its fiduciary duty rulemaking, which aims to protect investors by ensuring that asset managers are acting in their best interests. The SEC’s proposal will be considered by the SEC’s Division of Investment Management in 2018.

Bitcoin is a currency that was created as a digital currency that could be traded on the internet and also a payment system that could be used to transfer money between individuals. It is also a decentralized currency that allows for money to flow from person to person easily. The idea behind Bitcoin is that it could be used for online purchases, online gambling, online trading, online gaming, online gift cards, and many other types of payments. There are many different ways that you can get Bitcoin, and they are all listed in this article.. Read more about bitcoin upside and let us know what you think.

Asset managers focused on a growth strategy could be breaching their fiduciary duties by not including bitcoin in their portfolios, according to a professor of finance and business administration at the University of Southern California.

Growth-oriented asset managers should look to bitcoin

Last week, financial researcher Nick Bhatia said wealth managers looking to increase profits on behalf of their clients should consider bitcoin, Insider reported. Mr. Bhatia is also an associate professor of Finance and Business Administration at the Marshall School of Business at the University of Southern California. He is also the author of the book Multilayered Money: From gold and dollars to bitcoin and central bank digital currencies. He stated: Managers who are responsible for providing return growth to their clients and who have not currently researched bitcoin are bordering on fiduciary misconduct. If you ignore bitcoin as a growth manager now, you ignore the fact that an alternative monetary reality has emerged on this planet, the professor said, noting that he was not referring to fixed income managers whose mandate is to preserve capital and generate income. Bhatia believes asset managers should at least do their own analysis to see if bitcoin or other cryptocurrencies are suitable for their clients. By studying the pros and cons of cryptocurrencies, they can decide whether it is worth investing in them. But that’s not what he thinks he sees. He points out that asset managers seem to rely on old narratives that bitcoin and cryptocurrencies should be avoided. He also noted that those who make the excuse that bitcoin is a bubble have not done any research. On the US dollar, Mr Bhatia said the dollar is losing its status as the world’s reserve currency, noting that with the rise of inflation, assets such as land are almost displacing the dollar as a reserve currency. The researcher further said that bitcoin will not only remain a store of value, but could also become an anchor of the global monetary system in the future, replacing the US dollar, the publication reported. He also believes that the Bitcoin monetary payment protocol will become the system on which other systems will be built. I worked in the bond industry for several years, both in operations and trading. I was involved in routing dollars via email and fax through the spinning process, Fed spinning process, settlement of repotrades and settlement of securities of US treasuries through DTC, Bhatia told the publication, explaining the details: I’ve seen it up close every day of my life for years. I know how archaic the final accounting and dollar world is, it’s just old technology. And bitcoin is the technology that will underpin what we believe will be the final judgement in the future. Do you agree with Bhatia? Let us know your comments in the section below. Photo credit: Shutterstock, Pixabay, Wiki Commons Denial: This article is for information only. It is not a direct offer or invitation to buy or sell, nor is it a recommendation or endorsement of any goods, services or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author shall be liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services referred to in this article.Asset managers have a fiduciary responsibility to consider the interests of their clients in all transactions. This includes considering investments in cryptocurrencies, which are sometimes traded on exchanges. If asset managers don’t consider cryptocurrencies as investments (in order to avoid being held liable for violations of the fiduciary duty), then they are not doing their job, according to Dr. Thomas Lee of the University of Michigan’s Ross School of Business.. Read more about why are cryptocurrencies going up and let us know what you think.

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