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CONTRIBUTORS

David Alderman

Research Analyst,
Franklin Templeton Digital Assets

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A version of this article was first published on November 7, 2023 by Benzinga.

In today’s world, many have perceived crypto as having limited fundamental value and often being driven purely by speculation. While the speculative nature of crypto is undeniable, that speculation is built on a foundation of technology that is a significant leap forward in innovation. The innovation of crypto is best summed up as crypto reduces the cost of trust. In the traditional financial system, any transaction between two parties involves many trusted intermediaries; however, using crypto rails, there are significantly less parties involved in processing a transaction.

The key to eliminating these trusted intermediaries involves sharing a ledger that can be trusted by all parties involved. Enter decentralization. Shared ledgers among different parties are not capable of being fully trusted without sufficient decentralization.

As intermediaries are eliminated from economic activity, substantial economic savings are realized for all remaining participants involved in the process. Less middlemen means less mouths to feed, and improved cost efficiencies. Additionally, the fewer involved parties inherently result in decreased counterparty risks.

In stark contrast, centralized systems, by their very definition, bear inherent weaknesses, such as single points of failure and centralized control. This makes them susceptible to various issues, including corruption, inefficiencies, and mismanagement. It’s important to acknowledge these vulnerabilities when contrasting centralized systems with decentralized blockchain technology.

WHAT ARE THE RISKS?

All investments involve risk, including loss of principal.

There are risks associated with the issuance, redemption, transfer, custody, and record keeping of shares maintained and recorded primarily on a blockchain. For example, shares that are issued using blockchain technology would be subject to risks, including the following: blockchain is a rapidly-evolving regulatory landscape, which might result in security, privacy or other regulatory concerns that could require changes to the way transactions in the shares are recorded. The fund’s yield may be affected by changes in interest rates and changes in credit ratings. These and other risks are discussed in the fund’s prospectus.

Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. To obtain a summary prospectus and/or prospectus, which contains this and other information, talk to your financial professional, call us at (800) DIAL BEN/342-5236 or visit franklintempleton.com. Please carefully read a prospectus before you invest or send money.

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This document is intended to be of general interest only. This document should not be construed as individual investment advice or offer or solicitation to buy, sell or hold any shares of fund. The information provided for any individual security mentioned is not a sufficient basis upon which to make an investment decision. Investments involves risks. Value of investments may go up as well as down and past performance is not an indicator or a guarantee of future performance. The investment returns are calculated on NAV to NAV basis, taking into account of reinvestments and capital gain or loss. The investment returns are denominated in stated currency, which may be a foreign currency other than USD and HKD (“other foreign currency”). US/HK dollar-based investors are therefore exposed to fluctuations in the US/HK dollar / other foreign currency exchange rate. Please refer to the offering documents for further details, including the risk factors.

The data, comments, opinions, estimates and other information contained herein may be subject to change without notice. There is no guarantee that an investment product will meet its objective and any forecasts expressed will be realized. Performance may also be affected by currency fluctuations. Reduced liquidity may have a negative impact on the price of the assets. Currency fluctuations may affect the value of overseas investments. Where an investment product invests in emerging markets, the risks can be greater than in developed markets. Where an investment product invests in derivative instruments, this entails specific risks that may increase the risk profile of the investment product. Where an investment product invests in a specific sector or geographical area, the returns may be more volatile than a more diversified investment product. Franklin Templeton accepts no liability whatsoever for any direct or indirect consequential loss arising from use of this document or any comment, opinion or estimate herein. This document may not be reproduced, distributed or published without prior written permission from Franklin Templeton.

Any share class with “(Hedged)” in its name will attempt to hedge the currency risk between the base currency of the Fund and the currency of the share class, although there can be no guarantee that it will be successful in doing so. In some cases, investors may be subject to additional risks.

Please contact your financial advisor if you are in doubt of any information contained herein.

For UCITS funds only: In addition, a summary of investor rights is available from here. The fund(s)/ sub-fund(s) are notified for marketing in various regions under the UCITS Directive. The fund(s)/ sub-fund(s) can terminate such notifications for any share class and/or sub-fund at any time by using the process contained in Article 93a of the UCITS Directive.

For AIFMD funds only: In addition, a summary of investor rights is available from here. The fund(s)/ sub-fund(s) are notified for marketing in various regions under the AIFMD Directive. The fund(s)/ sub-fund(s) can terminate such notifications for any share class and/or sub-fund at any time by using the process contained in Article 32a of the AIFMD Directive.

For the avoidance of doubt, if you make a decision to invest, you will be buying units/shares in the fund(s)/ sub-fund(s) and will not be investing directly in the underlying assets of the fund(s)/ sub-fund(s).

This document is issued by Franklin Templeton Investments (Asia) Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong.

Unless stated otherwise, all information is as of the date stated above. Source: Franklin Templeton.

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