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First things first. “Crypto Dad” isn't a euphemism or an appropriated name. He's a real person – Chris Giancarlo, former chairman of the Commodities Futures Trading Commission (CFTC).
He was appointed to the CFTC as a commissioner by President Obama and was nominated as chairman by President Trump. His Senate approval was unanimous – a rarity for any Trump nominee, regardless of post.
Giancarlo was a CFTC member when bitcoin futures were approved and the moniker Crypto Dad stems from an appearance before the Senate Finance Committee soon after those derivatives were approved in which he told the members of the committee “I just want to talk to you as a dad.” And Crypto Dad was born.
Folksy as it sounds, Giancarlo – himself a father of three – has some compelling insight regarding how advisors can work with younger generations – demographics that aren't just crypto-enthusiastic, but also increasingly leery of traditional financial services firms.
Generational Divides Matter
Various studies and surveys confirm clients' interest in bitcoin and crypto knows no generational bounds. However, the reality is younger demographics – millennials, Gen Z and, to some extent, Gen X, are driving crypto investment adoption. Particularly with millennials and Gen Z, advisors need to understand what makes these groups tick when it comes to favoring crypto.
“My generation established a relationship with a banking institution as really the second one to their own school years,” says Giancarlo in an interview index provider FTSE Russell. “But this generation has had relationships with social media companies, online retailers, and mobile device providers long before they set foot into a branch bank. And I think the banking system and all the infrastructure that goes with it, the regulation of it, the central banks, have lost the trust of this generation. And I think they’re struggling to regain it while things like Bitcoin and cryptos come around.”
Advisors should remember that as was the case with the tech bubble bursting and Gen X, the global financial crisis is still fresh in the mind of many millennials because many were just entering the workforce when that catastrophe occurred.
Add to that, millennials and Gen Z are simply more comfortable in a digital world than say baby boomers. Both factors speak to those groups embracing crypto and other digital assets. Throw fears about economic regulations into the mix and it's a perfect storm for younger clients to be flocking to cryptocurrency.
“I think that younger people the reason why Bitcoin is so attractive is because of its censorship resistance,” notes Giancarlo in the FTSE Russell interview. “And I hope that the wildfire that’s caught the attention of younger people about concerns about censorship extends to the development of a digital dollar which I think the US government ultimately will do. The questions are whether it respects privacy or whether it’s a means of not only information gathering but censorship of our economic activity.”
Talking Tokens
Another element in understanding why younger generations are bullish on crypto is privacy. Think about the evolution of money. There was a time in world history when the only form of payment was hard tender – cash and coins – but that wasn't transferrable from one country to the next.
Checks, credit and debit cards changed that, but those forms of payment prioritize the customers' identity and that's something many younger clients are looking to avoid. Hence, they like the privacy associated with bitcoin.
“And I think that’s why there’s a generational issue because the new generation whether they started trading tokens on video games or otherwise, intuitively gets this in a way that the legacy systems and the people that preside over legacy systems, whether they’re at regulators or central banks, don’t quite get,” says Giancarlo.
Bottom line: The advisor that takes the time to understand why a client is talking about bitcoin and other digital, isn't wasting time. Rather, that advisor is gaining valuable insight that can lead to better client service and retention.
Related: Who Regulates Crypto? Everyone’s Involved but Nobody’s in Charge