The adoption of blockchain technology and cryptocurrency into the mainstream financial sector received a major boost as the CFA Institute added them to its curriculum starting from the 2019 academic year. Bitcoin, blockchain, and cryptocurrencies burst onto the global scene in 2008 with the online publishing of a whitepaper written under the pseudonym of Satoshi Nakamoto, spelling out a vision of a new way to transfer value over the internet. In the aftermath of its launch, just like any other disruptive technology, the crypto asset market has experienced all the classic phrases such as massive bull runs and crushing pullbacks, fear, uncertainty, doubt, and FOMO (fear of missing out), and everything on the spectrum. One thing that is for sure, though, is that crypto is going nowhere, and many of the world’s biggest investors and financial institutions are getting involved.
The CFA: Financial Terms Revised
The Chartered Financial Analyst (CFA) Institute, formerly known as the Association for Investment Management and Research (AIMR), is an international organization that provides investment professionals with education, a prescribed code of ethics, as well as several certifications programs. The primary mandate of the CFA is to spell out and maintain a high standard of ethics, education, and professional excellence for the investment industry. Its membership consists of persons who hold the chartered financial analyst (CFA) designation or those who are otherwise bound by its rules. The CFA Institute is most popularly known for creating, publishing, and maintaining the CFA Institute Code of Ethics and Standards of Professional Conduct. This Code is an ethical benchmark that binds investment professionals globally regardless of their roles in the industry. CFA designates, and CFA candidates are all required to adhere to this document throughout their careers. Additionally, the CFA Institute works to mould and influence policy and industry practice to prioritize the interests of investors.
To attain the CFA designation, which signifies the competence and integrity of financial analysts, candidates are required to pass three levels of examinations, from I to III. These examinations cover economics, accounting, ethics, money management, and security analysis. Apart from completing the three exams renowned for their difficulty, candidates are required to have four years of professional experience in a relevant field or a bachelor’s degree, or a combination of both work experience and education amounting to four years. The three exams were typically taken once a year in June, except for the Level I exam, which may also be taken in the month of December. Every exam usually requires at least 300 hours of study time. Even though candidates can take the examinations as many times as needed, this considerate amount of time spent studying poses a great deterrent to continuing the program after failing at one of the levels. Starting from 2021, however, the Level I exam shall be offered four times a year in February, May, August, and November, whereas Level II and III exams shall be administered twice a year from 2022 onwards. The examinations are tricky, with a pass rate of 43% in 2018 in the Level I examination, for instance, and 49% in 2020. Level I examinations involve analysis using tools of the topic areas of the candidate’s body of knowledge, including financial reporting, economics, ethical and professional standards, derivatives, portfolio management, and corporate finance. On the other hand, the Level II exam focuses on the valuation of various assets and the application of investment tools in contextual situations in particular. Level III exams feature effective wealth planning and portfolio management, needing the candidate to synthesize all the concepts and analytical techniques in the entire curriculum.
The CFA Institute, Cryptocurrency, and Blockchain
Starting 2019, the CFA Institute added topics on cryptocurrencies and blockchain technology to its Level I and Level II curriculums. Cryptocurrency and blockchain technology will appear under a new chapter called Fintech and Investment Management after growing interest among industry participants was perceived in surveys and focus groups. According to the Managing Director of General Education and Curriculum at the CFA, Stephen Horan, the field of cryptocurrencies is advancing at a more rapid pace than other fields and is not merely a passing fad. While the cryptocurrency industry has slowly been gaining mainstream acceptance over time, the decision by the CFA to include cryptocurrency and blockchain in its curriculum may represent one of the most important steps to the demystification of cryptocurrencies to students and the general public as well. Indeed, despite their step up in popularity over the last few years, cryptocurrencies remain a puzzle for most investors mainly because they combine two separate but related fields, finance, and computer science.
The CFA material regarding cryptocurrencies and blockchain will feature alongside other subjects in fintech, such as big data, artificial intelligence, machine learning, and automated learning. In contrast, other topics where economics meets digital assets may be added later on. The inclusion of cryptocurrency and blockchain in the curriculum of the CFA Institute is a massive stamp of approval and brings credibility to the sector. While admitting cryptocurrency is currently too volatile, Neville Jones, the chief investment officer of Wealthbar, says it is part of the innovation in the fintech sector. Understanding how fintech, blockchain, and cryptocurrencies work, along with their applications, is an invaluable tool for any professional in the financial industry.