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FTX Collapse Will Spur Move to Decentralized Exchanges, Franklin’s CEO Says - BLOOMBERG

NOVEMBER 18, 2022

(Bloomberg) -- Franklin Templeton’s Jenny Johnson sees the downfall of FTX likely pushing investors toward decentralized exchanges and to seek professional guidance on crypto assets.

The failure of the centralized exchange would drive crypto investors toward versions like Uniswap or SushiSwap, which are built on public chains, Franklin’s president and chief executive officer told Bloomberg News on Wednesday.

“Those types of things are proving out to have real value,” Johnson said in an interview on the sidelines of a conference in Mexico City. The suspect transfers between FTX and Sam Bankman-Fried’s crypto trading company Alameda Research would have been visible on a decentralized exchange, she said.

Johnson said FTX’s collapse would likely scare some investors away from the asset class while others would embrace more transparent products.

“You’re gonna have people who say, ‘You know what, I’m either gonna have somebody professionally who understands the space to do it or I’m not gonna get in it,’ ” she said.

Financial professionals had been skeptical of the returns offered by so-called stable coins, Johnson said.

“If you actually take FTX and follow the dominoes, they lead you all the way back to the stable-coin blowups in the spring,” she said. “The contagion, I think went backward and anywhere where people are creating their own coins, like a loyalty program and borrowing against it, you’re going to have a problem because there isn’t something real behind that,” she said.

ESG and Congress

Asked if Republicans taking control of the US House of Representatives would lead to push-back against corporate ESG strategies, Johnson said she didn’t think it would make a difference.

“In this movement toward say renewable energy, there are going to be choke holds in the process that are going to be really investing opportunities,” she said. “I think that the trend isn’t going to change.”

--With assistance from Nacha Cattan.

(Updates with comments on US elections in last two paragraphs.)


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