CEO Jenny Johnson believes that the industry should brace itself to be regulated, and cryptocurrencies like bitcoin are a “distraction” from the benefits of blockchain technology.
This year’s CoinDesk Consensus Festival comes at a time when the US crypto landscape is about to drastically shift. As conversations about crypto regulations become commonplace for industry players based in the US, the CEO of investment giant Franklin Templeton believes that the industry should be ready to accept a regulated future.
In a talk at the crypto conference on Wednesday, CEO Jenny Johnson said that the future of the crypto sector “will be regulated,” and that she believes that people are ignoring crypto’s real innovation – blockchain technology.
“Bitcoin is the greatest distraction from the greatest disruption [coming to the financial system], and that’s blockchain,” Johnson said.
“I can tell you, if bitcoin ever became so big that it became a threat to the U.S. dollar as the reserve currency, the U.S. would limit … the use of bitcoin. Currencies are very important for governments … to manage their economies,” said Johnson. “They will not cede their currency to this concept of a global currency.”
As for how crypto companies should operate in the future, Johnson says that it would be better for companies to engage directly with regulators as they continue to develop new products.
Johnson then shared that Franklin Templeton has been in close contact with the US Securities and Exchange Commission (SEC) during the development of its newly launched blockchain-based mutual fund, the OnChain US Government Money Market Fund (FOBXX).
The fund is the US’s first registered mutual fund that uses a public blockchain to process transactions and record share ownership, according to a press release. It is supported on Ethereum, via the layer blockchain Polygon.
“Extending the reach of the Franklin OnChain U.S. Government Money Fund to Polygon enables the fund to be further compatible with the rest of the digital ecosystem, specifically through an Ethereum-based blockchain,” said Roger Bayston, head of digital assets at Franklin Templeton, in the press release.
A regulated crypto future will also happen worldwide, says Johnson
Franklin Templeton manages $1.5 trillion in assets, and has offices in over 30 countries worldwide. With the scale of their operations, Johnson adds that they’re used to working with regulators worldwide – and has teased positivity in offering crypto products internationally.
“I can tell you, different areas in the world are more advanced than others, more comfortable with [crypto] than others,” Johnson said, naming Singapore, Hong Kong, and the UAE as examples of crypto-friendly jurisdictions.
However, Johnson says that both US and non-US regulators are hesitant to pass crypto regulations that may result in unintended consequences.
“This is a complicated space, and the regulators are trying to be thoughtful,” Johnson said.
With current market volatility, traditional finance (TradFi) investment banks like Franklin Templeton are finding themselves in positions to offer products into digital assets, and have merged both worlds by offering funds that utilise blockchain technology.
Investors have been pushing to find alternative ways to safeguard their money: including pouring a cumulative of $300 billion into money-market funds in three weeks after the collapse of Silicon Valley Bank, presenting an opportunity for already-trusted TradFi banks to provide crypto-related products and services.
