Although you might not know it from looking at the markets, crypto had a watershed month in February. A sequence of events accelerated the adoption of crypto far beyond the hopes of the most ardent supporters. When we look back at the story of crypto, February 2022 will stand out as a decisive turning point. Although they were hidden between headlines of global conflict and record inflation, the signs were clear for those watching closely.
It started in Canada, with Prime Minister Justin Trudeau cutting protesters off from their bank accounts — a historic act of currency weaponisation. The Russian invasion of Ukraine was next, with Putin effectively destroying the Russian economy and its sovereign currency. The United Nations’ response was to cut Russian banks off from the SWIFT global banking network in the second act of currency weaponisation. The result has been nations and institutions taking pause to question whether they own the digital money in their bank accounts. With state control of both currency printing and regulated banking, no one’s wealth is truly safe.
You need look no further than three of the world’s largest financial institutions to see the dramatic shift taking place — JP Morgan, BlackRock, and Goldman Sachs. With combined assets under management over $15Tr, their approval of the crypto asset class matters.
In 2017, JP Morgan’s CEO, Jamie Dimon, called Bitcoin a “fraud”. Even as late as 2021, he stated Bitcoin was worthless. Yet, in his shareholder letter at the end of 2021, Dimon said, “We believe there are many uses where a blockchain can replace or improve contracts, data ownership and other enhancements.” JP Morgan was ironically the first major bank to provide their wealth-management clients exposure to Bitcoin and crypto funds.
BlackRock is the largest investment fund manager globally, with around $10Tr in assets under management. Like Dimon, CEO Larry Fink dismissed Bitcoin as an “index of money laundering” in 2017. In stark contrast to his shareholder letter from February this year, Fink stated, “As we see increasing interest from our clients, BlackRock is studying digital currencies, stablecoins and the underlying technologies to understand how they can help us serve our clients”.
“The war will prompt countries to re-evaluate their currency dependencies”, he says, “even before the war, several governments were looking to play a more active role in digital currencies and define the regulatory frameworks under which they operate.” Dramatic words from the very top.
In 2020, Goldman Sachs declared, “Cryptocurrencies including bitcoin are not an asset class”. In March this year, Goldman Sachs executed a first, historical, over the counter options trade of Bitcoin. Following the purchase, Max Minton, Asia Pacific head of digital assets for Goldman Sachs, said, “We are pleased to have executed our first cash-settled cryptocurrency options trade with Galaxy. This is an important development in our digital assets capabilities and for the broader evolution of the asset class.”
The rapid shift in tone and attitude from the world’s financial elite tells an important story about how much faster crypto adoption might happen than we think. The world is changing, and it needs currencies that aren’t dependent on the decisions of politicians. Make no mistake, this is a financial revolution, albeit a peaceful one. Driven by innovation, technology, and social need, decentralised currencies are here to stay.
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Consistent with our dedication to maintaining open and transparent discussions about the evolving situation with Haru Invest ("Haru"), we have prepared a detailed update on the measures we've taken and expect to take in the future.