Every National Treasury Needs to Hold Bitcoin: Franklin Templeton

According to the 1.5 trillion dollar asset manager Frankin Templeton, developing countries will continue to accept Bitcoin (BTC) before it becomes necessary for all national treasuries.

The investment firm's head of digital assets and investor advisory services, Sandy Kaul, spoke extensively this week about the future of Bitcoin adoption — from its place in investors' portfolios to the technology stack, to its role among nations and governments.

Bitcoin for nation states

According to Kaul, BTC is becoming an attractive tool for underdeveloped countries to compete with larger economies on a “more level playing field” by consolidating their purchasing power around digital currency.

“I think you're going to see more of that,” he said during an interview on the Cow's Coin Stories podcast. I think it's going to be something that every treasury needs to have because some of their business is easily mixed with Bitcoin payments.

Admitting that central bank digital currencies (CBDCs) would make cross-border trade more efficient, the spokesperson said such currencies would still be subject to national exchange rate risks.

In contrast, Bitcoin can serve as a “base of international trade,” meaning that each country needs to hold some BTC reserves to facilitate efficient conversions.

“I see it expanding into the traditional banking system as a fundamental part of that system,” she said.

Bitcoin for Diversification

Franklin Templeton is among 13 applicants for the Bitcoin Spot ETF in the United States. As regulators grow more open-minded about the product, many analysts expect Franklin and other applicants to be allowed to launch as early as next year.

By providing BTC exposure through an ETF wrapper, the fund finds a way to easily incorporate it into investor portfolios. Kaul called BTC one of the “best-performing asset classes” of the past decade, even as it entered a “crito winter.”

As an alternative asset class, the proxy BTC can provide alternative exposure and diversification to portfolios, and thus provide better risk-adjusted returns.

In the next 5 to 10 years, Kaul envisions crypto to unlock many benefits that modern-day investors and issuers are unaware of.

“The money in my account and the investments I make in my portfolio are going to work as loyalty programs and open up all kinds of benefits for me,” she said.