Bitcoin for Boomers?: River Financial secures funding build Bitcoin financial services

July 10, 2020

2 min read

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What's going on here?

River Financial has secured $5.7m in seed funding from investors such as Polychain Capital, Slow Ventures and Castle Island Ventures to build Bitcoin financial services.

What does this mean?

River Financial is one step closer to its aim of growing Bitcoin into a globally recognised and accepted currency and store of value that serves as an alternative to fiat currencies (government-backed currencies that are not backed by physical commodities). The fresh capital will be used to scale River Financial as it seeks licencing in more states in the US over the summer. The Bitcoin broker is also looking to provide US dollar current and savings accounts and tax-advantaged investment accounts (such as ISAs). Since its launch, River Financial’s volume has grown an average of 80% month on month. Since March 2020, this growth has been driven by investors over 55, wealthier clients looking to hedge against the Federal Reserve’s monetary policy response to COVID-19. Currently, this generation of baby boomers forms 77% of River Financial’s customer base.

What's the big picture effect?

Investing in cryptocurrencies has traditionally been more popular among millennials. However, COVID-19 has accelerated the popularity of non-governmental currencies among older investors as a hedge against the Fed’s inflationary monetary policy. Bitcoin recently received a vote of confidence from Paul Jones, a hedge fund manager well-known for his bets on currencies and interest rates. In “The Great Monetary Inflation”, a letter sent to investors of his Tudor BVI fund in early May, he predicted the growing role of Bitcoin as a safe asset amidst current levels of debt creation. With a maximum supply of 21m Bitcoins in the world, the tradeable asset provides a scarcity premium that is independent of central banks’ quantitative easing measures. The attractiveness of owning Bitcoin will grow as the digitisation of currency, whether through Facebook’s Libra, China’s DCEP, the FedCoin or JPCoin, becomes more commonplace in the near future and the understanding of Bitcoin increases. River Financial’s clientele of older, and thus often wealthier, clients thereby seeks to capture the upside of boomers’ changing perception of Bitcoin as an investable asset. 

As Bitcoin gains traction among larger swathes of investors looking to treat the asset class as a long-term store of value amidst the expansion of money and geopolitical tensions, domestic and cross-border cryptocurrency regulations will have to keep apace to ensure safe and reliable market conditions for investors. This will go a long way in mitigating systemic risks in the industry by preventing a repeat of the herd behaviour that caused the previous Bitcoin market crash.

Report written by Su Jia Moh

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