I once heard a marketing consultant (referencing the old west as a metaphor) say that your smartest move if you want to be successful in business isn’t to be a pioneer. Why? Pioneers usually end up full of arrows. The people who come after them end up surviving and thriving.
While there is something to be said for the opportunity of being on the bleeding edge of an innovation, very few people on that edge make the big time. What the innovators do, though, is they make a way for those who follow them and, thus, make the path safer.
(In a related vein of thought, it’s been said that wisdom is learning from the mistakes of others.)
The past couple of years in the cryptocurrency world have shown the signs that we’re moving beyond the pioneer stage of crypto and into the settlers stage of crypto.
In other words, we’re at the point where average, everyday people, the retail investors, are moving into crypto as part of the normal investment portfolio these days.
Which is why a new proposed rule change from the Federal Reserve is especially welcome news.
The Fed’s proposed rule change
To explain the importance of the proposed rule change, some background may be helpful to provide context.
Many people, when they think of what they need to be concerned about in crypto, think of risk. And risk is certainly a factor in cryptocurrency investing. It’s one of the big reasons that people do invest into crypto. (I’ve talked about this before: risk in crypto isn’t a bug; it’s a feature.)
That realization may leave you wondering, though, “If it isn’t risk, then what is the biggest concern with crypto?”
That’s a smart question to ask, and very few people dig into the details of crypto to even think to ask it.
And the answer may surprise you.
The biggest concern with crypto is actually access risk, meaning that not everyone has access to their crypto once they’ve bought it, often because of government or Federal Reserve regulations, or a misunderstanding of how a regulation is to be applied.
What has happened in the past is that, on occasion, an overly zealous member of bank management would interpret Fed and government regulations in such a way that it seemed like a good idea to them to simply stop doing business with cryptocurrency companies or people who invested into cryptocurrencies.
They would simply close the accounts without warning and send a letter saying, basically, “We don’t want your business anymore.”
So much for banks making financial transactions easier…
Of course, I’m not saying that all banks did that to all customers. But the fact that it happened at all is alarming because it makes the ability to access your funds precarious and dependent on the (mis)interpretations of policy and the whims of someone that you probably don’t know and can’t plead your case to.
Which is why the proposed Fed rule change is good news for you and me. Olivier Acuna with Coindesk tells us about the proposed change:
The U.S. Federal Reserve has proposed a rule that would set in stone its previous actions to toss out “reputation risk” as a factor in bank supervision, which is believed to have contributed to the debanking of crypto insiders and firms.
So, if implemented, this new rule would greatly reduce the chance of banks giving the cold shoulder to crypto companies.
In other words, this rule change would go a long way to completely eliminating the biggest real risk that too many investors didn’t know that they should be looking out for.
Who this proposed rule change would really help
Frankly, this proposed rule change has the potential to help everyone except those people who irrationally hate crypto just because it’s crypto (there will always be some).
And when it comes time for you to begin to cash out your coins and other investments to be able to provide a comfortable retirement for yourself, the ability to access your funds easily and conveniently is a huge issue that you don’t want to have to deal with at that time. It’s better to have it settled now.
So, doing away with the access issue with this proposed rule change moves crypto investing that much farther away from the wild-eyed berserker enthusiasm of some of the early advocates for crypto.
And where is it moving to? It is moving more firmly into the first generation settler confidence that government guarantees of being able to access your funds helps to cement into place.
That’s a good thing because, historically, when regulations reduce risk, capital flows more freely and more and more people decide to participate in the market for that asset class.
Which is why many long-term investors are turning their attention towards crypto now: because of structural shifts in the market instead of paying any attention to hysterical attention-seeking headlines.
If you have an interest in possibly diversifying into cryptocurrencies to help you reach your personal investment goals and would like to do that in a tax-advantaged way, be sure to get a copy of our Free Crypto IRA Guide. Or if you’ve completed your due diligence and ready to get started, open your Digital IRA online (anytime, day or night) in less than 10 minutes.
