The Crypto-Centric Financial Planner

The Crypto-Centric Financial Planner: Navigating Blockchain for Modern Portfolio Management

Course Description:

Modern financial planning is undergoing a paradigm shift with the advent of blockchain technologies like Bitcoin, Ethereum, and Decentralized Finance (DeFi). This comprehensive 6-week course aims to equip Certified Financial Planners (CFPs) and financial advisors with the necessary knowledge and tools to effectively incorporate crypto-assets into their practice, from client acquisition to portfolio management.

Learning Objectives:

By the end of this course, learners will be able to:

• Understand the origins, mechanics, and investment rationale of Bitcoin and Ethereum.
• Navigate the complexities of crypto transactions, wallets, and security protocols.
• Comprehend the underpinnings of the DeFi landscape, including stablecoins, lending, and decentralized exchanges.
• Recognize and assess the myriad of use cases, from utility to governance tokens.
• Translate this knowledge into actionable insights for client engagement, portfolio allocation, and compliance considerations.

Prerequisites:

• Basic knowledge of financial planning concepts such as risk assessment, portfolio management, and asset allocation.
• Familiarity with traditional financial products like equities, bonds, and mutual funds.
• A willingness to embrace new technologies and their potential impact on the financial planning landscape.

Who Should Enroll:

• Certified Financial Planners (CFPs)
• Registered Investment Advisors (RIAs)
• Financial Consultants interested in offering crypto-related services
• Wealth Managers seeking to diversify client portfolios with digital assets

 

While the technical details of blockchain technologies can often be overwhelming, this course aims to deliver the subject matter in an engaging, straightforward manner, making it easy for financial professionals to adapt and thrive in this evolving financial ecosystem.

 

Course Outline

Module 1 – Introduction to Bitcoin and Blockchain 

• Why Bitcoin was Created
  • The origins of Bitcoin in the 2008 financial crisis
  • The need for an alternative financial system

 

• Bitcoin – The Solution
  • Transactions: Peer-to-peer network vs. traditional intermediaries
  • Hashing: Enabling proof of work and immutable records
  • Mining: Incentives for a distributed network of validators
  • Ledger: Utilizing a distributed ledger for consensus and transactions

 

• Blockchain Characteristics
  • Trustless: Eliminating the need for third-party intermediaries
  • Immutable: Ensuring transactions can’t be altered
  • Decentralized: No central authority in charge
  • Transparent: Public visibility into transactions on the ledger

 

• Bitcoin Upgrades & Forks
  • Taproot: Privacy and fee improvements
  • Lightning Network: Enabling faster and cheaper payments

 

• Investment in Bitcoin
  • Investment theses: Digital gold, store of value, scarcity
  • Valuation: Comparison to gold’s market capitalization

Module 2 – Introduction to Ethereum 

• Why and How Ethereum Works
  • The Vision of Vitalik Buterin: Understanding the origin and ethos
  • The Concept of a Programmable Blockchain: Beyond just a digital currency
  • Use-Cases: Decentralized Apps and Decentralized Finance (DeFi)

 

• Smart Contracts and Composability
  • Smart Contracts Defined: The basic code that powers the network
  • Composability: “Money legos” and the art of building on existing contracts
  • Interoperability: How Ethereum communicates with other blockchains and its own ecosystem

 

• Understanding Gas
  • What is Gas: The fuel for executing transactions and contracts
  • Gas Fees: Calculating costs for transactions and smart contracts
  • Gas Limit and Gwei: Customizing transaction speed and cost

 

• Ethereum Upgrades and Changes
  • EIP and ERC Standards: Understanding Ethereum Improvement Proposals and token standards
  • EIP 1559: A transformative update for fee markets
  • The Merge: The transition from Proof of Work to Proof of Stake

 

• Using Ethereum
  • Wallets and Keys: How to safely store and manage your Ethereum
  • Tokens: Understanding ERC20 (fungible tokens) and ERC721 (non-fungible tokens)
  • Ethereum 2.0: Upcoming changes, including Proof of Stake and scaling solutions like Rollups

 

• Decentralized Applications (DApps)
  • What Makes a DApp: Key components and characteristics
  • Popular DApps: Exploring use-cases from finance to art

 

• Security Considerations
  • Best Practices: Keeping your assets and contracts secure
  • Common Pitfalls: Avoiding scams and hacks

 

Module 3 – Crypto Transactions

• Wallet Technology
  • Public/Private Keys: The cryptographic basis for ownership and access

 

• Crypto Wallets
  • Types: 
    • Software
    • Hardware
    • Paper
    • Custodial
    • Non-custodial
  • Multi-Signature Wallets
    • Requiring multiple authorizations for transactions

 

• Metamask Setup
  • A hands-on guide

 

• Hardware Wallet Setup Demo

Ensuring maximum security with external devices

• Centralized Exchanges
  • Overview: Role and relevance in the ecosystem
  • Mechanics: Order books, liquidity, and trading pairs
  • Regulatory Aspects: KYC/AML requirements and licensing
  • Pros and Cons: Speed, ease of use vs. custodial risks

 

• Centralized Platforms for buying, selling, and storing crypto

• Binance
• Coinbase
• KuCoin
• ByBit
• Kraken

 

• Decentralized Exchanges
  • Overview: Role and relevance in the ecosystem
  • Mechanics: Order books, liquidity, and trading pairs
  • Regulatory Aspects: KYC/AML requirements and licensing
  • Pros and Cons: Speed, ease of use vs. custodial risks

 

• Decentralized Platforms for buying, selling and custodial crypto

• Uniswap
• Curve
• Dodo
• PancakeSwap

 

• The Four Pillars of Understanding Custodians
  • The Essentials of Custodianship
    • Definition, functions, and the different types such as cold storage vs. hot wallets.
    • A sprinkle of historical context: Transition from traditional finance to crypto.
  • Regulation & Security
    • Melding compliance aspects like KYC/AML, GDPR, and encryption techniques.
    • Quick guide to security protocols, including Multi-Sig, HSMs, and disaster recovery options.

Centralized Custodians	Decentralized Custodians
Pros:	Pros:
– Ease of use	– Full user control
– Customer support	– Lower fees
Cons:	Cons:
– Central failure point	– User complexity
– Higher fees	– No customer service

• Decentralized vs. Centralized Custodians
  • Examining the contrasts and trade-offs between traditional and decentralized custodians, using a comparative lens.
• Future-Proofing and Innovations
  • Emerging trends like smart contract-based custody solutions and integration with DeFi.
  • A glimpse into the role of custodians in the broader Web3 space and future outlook.

Module 4 – Decentralized Finance (DeFi)

• What is DeFi, Smart Contracts, Composability
  • Understanding DeFi as a concept and its disruptive potential
  • Introduction to Smart Contracts: The building blocks of DeFi
  • Composability: The lego-like interactivity within the DeFi ecosystem

 

• Intro to Stablecoins, DeFi Lending
  • What are Stablecoins: Definition and types
  • DeFi Lending Protocols: How they work and differ from traditional systems
  • Risks and rewards in DeFi lending

 

• Decentralized Exchanges
  • Automated Market Makers (AMMs): Liquidity pools and swapping
  • Order-Book Based Decentralized Exchanges: Trading mechanics
  • Liquidity Provision: Risks and returns

 

• Yield Farming and Staking
  • Basics of Yield Farming: Strategies to maximize returns
  • Staking in Proof-of-Stake Networks: Basics and considerations
  • Risks associated with Yield Farming and Staking

 

• Oracles and Insurance
  • What are Oracles: Role in Smart Contracts
  • Types of Oracles: Centralized, Decentralized, and Hybrid
  • Decentralized Insurance: Covering smart contract failures and other risks

 

• DeFi Risks and Mitigations
  • Smart Contract Risks: Code exploits and vulnerabilities
  • Regulatory Risks: Current and potential future regulations
  • Risk Mitigation Strategies: Audits, insurance, and governance

 

• Future of DeFi
  • Layer 2 solutions: Scalability for DeFi
  • Interoperability: Bridging multiple blockchains
  • Community and Governance: DAOs in DeFi

Module 5 – Portfolio Diversification, Risk Management, and Case Studies

• Portfolio Diversification with Crypto
  • Diversification Basics: The concept revisited in the crypto context
  • Correlation and Uncorrelation: How crypto fits into traditional portfolios
  • Types of Crypto Assets: From currencies to tokens and beyond
  • Risk-Adjusted Returns: How to measure and balance
  • Asset Custody: Self-custody vs managed services

 

• Risk Management Strategies in Crypto
  • Risk Assessment: Understanding the unique risks crypto brings
  • Portfolio Rebalancing: Timing and strategies in a volatile market
  • Stop-Loss, Limit Orders, and Hedging: Tools to mitigate downside

 

• Asset Allocation Models
  • Fixed vs. Dynamic Asset Allocation: A comparative study
  • Sector Rotation in Crypto: Timing the market cycles
  • Importance of Asset Liquidity: How to ensure you can move in and out

 

• Future Risks and Opportunities
  • Regulatory Changes: Potential impacts on portfolio strategies
  • Macroeconomic Indicators: Interest rates, inflation, and their crypto implications
  • Geo-Political Factors: How they could affect crypto markets
• Risk Management Strategies in Crypto
  • Case Studies of Market Failures
    • Celsius Network Collapse
      • Background: Overview of Celsius’s business model as a centralized lending platform.
      • Causes of Failure: Risky investment strategies, lack of transparency, and market volatility.
      • Impact on Investors: Loss of funds, legal repercussions, and trust erosion in centralized platforms.
      • Lessons Learned: Importance of due diligence, diversification, and understanding platform risks.
    • Three Arrows Capital (3AC) Insolvency
      • Background: Profile of 3AC as a leading crypto hedge fund.
      • Causes of Failure: Over-leverage, exposure to Luna and TerraUSD collapse, and poor risk management.
      • Impact on the Market: Contagion effects leading to liquidity crises in other platforms.
      • Lessons Learned: Necessity of risk assessment, stress testing, and monitoring counterparty risks.
    • FTX Exchange Collapse
      • Background: FTX’s rise as a major crypto exchange and its affiliated trading firm, Alameda Research.
      • Causes of Failure: Mismanagement of customer funds, lack of regulatory compliance, and internal control failures.
      • Impact on the Crypto Ecosystem: Significant market downturn, regulatory scrutiny, and increased calls for transparency.
      • Lessons Learned: Importance of corporate governance, regulatory oversight, and safeguarding client assets.

Module  6 – Regulatory and Financial Considerations 

• Tax Implications and Reporting
  • Capital Gains Tax: Short-term vs. long-term gains
  • Tax Loss Harvesting: Strategies to optimize for taxes
  • Reporting Requirements: Understanding local and international laws

 

• Stress Testing and Scenario Analysis
  • Methodologies: Monte Carlo simulations, historical backtesting, etc.
  • Tools: Software and platforms for stress testing
  • Interpretation: How to use the data in decision-making
  • Case Studies: Navigating Crypto Crises
    • Analyzing the Failures
      • Celsius Network: Assess how stress testing could have identified vulnerabilities in their lending model.
      • Three Arrows Capital: Evaluate the lack of scenario analysis in their investment strategies.
      • FTX Exchange: Discuss the role of regulatory oversight and internal audits.
    • Regulatory Responses
      • Global Regulatory Actions: Overview of how regulators reacted to these events.
      • Compliance Lessons: Importance of adhering to legal standards and implementing robust compliance frameworks.
    • Impact on Regulatory Landscape
      • Increased Scrutiny: How these events have led to stricter regulations.
      • Future Regulations: Potential regulatory changes affecting crypto businesses and investors.
  • Financial Instruments and Derivatives
  • Understanding Hidden Risks
    • Leverage and Margin Trading Risks: How excessive leverage contributed to 3AC’s downfall.
    • Derivative Exposure: The role of complex financial instruments in amplifying losses.
  • Interactions with Traditional Financial Systems
  • Bank-like Crypto Firms
    • Case Studies
      • Celsius and Voyager Digital: Examination of crypto firms offering traditional banking services without equivalent regulation.
      • FTX’s Traditional Finance Ties: How FTX’s partnerships with traditional financial institutions were affected.
    • Regulatory Arbitrage: Risks associated with operating in regulatory grey areas.

 

• Client Communication and Compliance
  • Transparency: Best practices in client communications
  • Compliance and Regulation: Navigating legal complexities
  • Consent and Contracts: Legal frameworks for crypto investments

 

• Regulatory and Compliance Aspects
  • Regulatory Frameworks: Current and pending laws affecting crypto
  • Compliance Audits: Periodic checks for adhering to rules
  • Due Diligence: KYC/AML in the crypto world
  • Potential Impact with BSA and OFAC
  • Addressing GDPR and CCPA

 

• Liquidity Considerations
  • Market Liquidity: Buy/sell impact on market prices
  • Asset Liquidity: How easy it is to convert assets to cash
  • Liquidity Risks: Potential bottlenecks and their solutions

 

• Financial Instruments and Derivatives
  • Crypto Futures and Options: Hedging and speculation tools
  • Swaps and Synthetics: Advanced financial instruments
  • Risks and Rewards: What you must know before diving in

 

• Interactions with Traditional Financial Systems
  • Banks and Crypto: The Evolving Relationship that collapsed 
    • SVB
    • Signature
    • Silvergate Capital
  • Bank-like Crypto Firms
    • Celsius  
    • Voyager Digital
    • Genesis 
    • BlockFi
  • Payment Systems: Cross-border and local payment integration

 

• Crypto in Institutional Portfolios 
  • MicroStrategy
  • Coinbase
  • Tesla
  • Galaxy Digital Holdings
• • The rising trend (ETFs)
    • ARK Invest
    • Blackrock
    • Bitwise
    • Invesco
    • VanEck
    • Fidelity
  • Bitcoin miners (owns stock for 4-5 mining companies)
    • Riot Blockchain
    • Marathon Digital Holdings
    • Hut 8 Mining
    • Hive Blockchain
    • Bit Digital
    • DMG Blockchain Solutions Inc.
    • Bit Farms Ltd.
  • Stress Testing and Scenario Analysis

Module 7 – Use Cases

• Tokens and Wallets
  • Utility Tokens: Facilitating access within a specific ecosystem
  • Security Tokens: Investment contracts with asset backing
  • Governance Tokens: Voting and control in decentralized systems
  • Wallets in Practice: Choosing and securing the right types of wallets

 

• NFTs (Non-Fungible Tokens)
  • Past: The origin story and first-wave applications
  • Present: Current trends and market dynamics
  • Future: Potential developments and disruptive innovations
  • Case Studies: Iconic examples and their impact

 

• DAOs (Decentralized Autonomous Organizations)
  • The DAO Concept: Governance and decision-making in a decentralized context
  • DAO Protocols: Technical backbones facilitating DAOs
  • DAO Use Cases: Real-world applications and examples
  • Ethical and Governance Considerations: Navigating the complexities

 

• Crypto Asset Valuation Techniques
  • Fundamental Analysis: Examining whitepapers, tokenomics, and market fit
  • Technical Analysis: Charts, trends, and trading volumes
  • Sentiment Analysis: Public opinion and its impact on asset prices
  • Risk and Reward: Weighing volatility against potential gains

 

• Emerging Use Cases
  • Decentralized Identity: Self-sovereign identity on the blockchain
  • Supply Chain: Tokenizing and tracking goods transparently
  • Real-World Assets: Tokenization of physical assets like real estate

 

• Regulatory Environment and Use Cases
  • Legal Frameworks: How laws are shaping or inhibiting use cases
  • The SEC and Token Classifications: Navigating the regulatory maze

 

• Future Outlook and Investment Considerations
  • Upcoming Innovations: A sneak-peek into what’s on the horizon
  • Long-term Investment Strategies: Holding, staking, and liquidity provisioning

 

Module 8 – Crypto in Your Practice Part 1: Strategy and Client Management

• Working with Clients
  • Segmenting by Risk Tolerance: Understanding the financial risk profiles of different clients
  • Goals Assessment: Aligning crypto investments with broader financial objectives
  • Conversational Strategies: How to discuss crypto with varied client types

 

• Allocation to Bitcoin and Other Cryptos
  • Determining Portfolio Percentages: Best practices for asset allocation
  • Alternative Assets: Comparing crypto to other asset classes
  • Rebalancing Strategies: Managing the crypto asset mix over time

 

• Addressing Objections
  • Volatility Concerns: Crafting effective counter arguments
  • Regulatory Uncertainty: Easing fears through information
  • Trust and Security: How to alleviate concerns around hacks and loss
  • Mitigating Key losses

 

• Your Practice
  • Consultation Services: Positioning your practice as a crypto expert
  • Tax and Estate Planning: Offering comprehensive services
  • Partnership Opportunities: Aligning with legal and tech experts for a full-service offering

 

• Wrap-Up and Preview
  • Summary of Key Takeaways
  • A glimpse into next week’s content

Module 9 – Crypto in Your Practice Part 2: Research, Compliance, and Operations

• Investment and Custody Options
  • Asset Types: Bitcoin, Ethereum, Altcoins, Funds, and Staking
  • Custody Solutions: Software wallets, hardware wallets, and third-party custody services
  • Risk Management: Strategies to mitigate downside risks

 

• Metrics and Research
  • Tools for Price Analysis: The importance of data analytics tools in crypto
  • Market Fundamentals: What drives the crypto market
  • Sentiment Analysis: Gauging market mood for better investment decisions

 

• Benchmarking and Performance Metrics
  • KPIs: Identifying key performance indicators for your practice
  • Competitive Benchmarking: How you stack against industry standards

 

• Client Communication and Onboarding
  • Communication Channels: Email, social media, and direct conversations
  • Onboarding Processes: Streamlining client adoption with effective systems
  • Ongoing Education: Keeping clients updated and engaged

 

• Ethical Considerations
  • Maintaining a high standard of Ethical and Professional conduct
  • Transparency: Ensuring full disclosure of fees, risks, and potential conflicts of interest

 

• Wrap-up and Next Steps
  • Summary of Key Takeaways: What to remember when the course ends
  • Actionable Checklists: A list of next steps for implementing these learnings into your practice
  • Recommended Reading: Curated resources for ongoing education and insights

 

Workshops

Undetermined at this point – can be tailored to the certification objectives

Readings

Undetermined at this point – can be tailored to the certification objectives

Assessments

Module specific assessments – Random 10 out of 15 Formative Questions for each module

DACP Certification 

The question bank from the module assessments will include 135 questions.  We can add another 25 questions to this pool for 160 total questions.  For the certification, we can select a random set of 100 questions for the certification.  Taken over a 2-hour testing period.