Crypto for Advisors: Advisors and Crypto

At
Consensus
2024,
held
in
Austin,
there
was
an
exclusive
RIA
&
FA
Day
session.
Approximately
120
financial
advisors
spent
the
day
learning
about
digital
assets,
engaging
with
industry
thought
leaders
and
networking
with
peers.

The
energy
was
positive,
and
the
conversations
meaningful,
with
investors’
interest
in
this
asset
class
growing.
Although
the
event
was
closed-door,
key
themes
are
worth
sharing.
Thank
you
to
Adam
Blumberg,
one
of
the
day’s
contributors,
for
highlighting
trends
and
takeaways
in
today’s
newsletter.

–


Sarah
Morton

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Consensus
2024
marked
a
significant
milestone
for
the
crypto
industry,
driven
by
positive
legislative
developments
and
the
approval
of
an
Ethereum
ETF.
The
atmosphere
was
electric,
with
enthusiasm
reaching
new
heights.

FA/RIA
Day:
A
Focused
Learning
Experience

Thursday
was
dedicated
to
financial
advisors
and
registered
investment
advisors
(FA/RIA),
drawing
approximately
120
professionals
keen
to
explore
integrating
crypto
into
their
practices.
The
day
was
filled
with
insightful
discussions,
networking
opportunities
and
expert
guidance.

The
recent
ETF
approvals
and
bullish
price
trends
have
piqued
the
interest
of
more
advisors
and
investors,
creating
a
fertile
ground
for
knowledge-sharing
and
growth.

Prioritizing
Practical
Integration
Over
Technical
Jargon

The
primary
objective
of
FA/RIA
Day
was
to
provide
actionable
insights
on
incorporating
crypto
into
financial
practices.
Instead
of
delving
into
the
technical
intricacies
of
blockchain
and
price
movements,
the
focus
was
on
practical
application
within
a
financial
advisory
context.

Education:
The
Cornerstone
of
Crypto
Adoption

A
recurring
theme
was
the
crucial
role
of
education.
Advisors
must
understand
the
available
options,
strategic
allocation,
investment
theses,
regulatory
landscape
and
compliance
requirements.

Equally
important
is
the
need
to
educate
investors.
Despite
growing
awareness
of
bitcoin
and
crypto,
a
significant
knowledge
gap
persists.
Effective
education
equips
advisors
to
discuss
crypto
allocations
confidently
and
have
informed
conversations
with
clients.

Exploring
Investment
Options

Panel
discussions
covered
a
range
of
investment
options,
including
direct
ownership,
custody
through
SMA
platforms,
ETFs
and
investments
in
public
companies
like
MicroStrategy
and
bitcoin
mining
companies.

Each
option
has
its
pros
and
cons.

While
direct
ownership
embodies
the
ethos
of
crypto,
it
introduces
compliance
and
administrative
challenges
that
many
advisors
prefer
to
avoid.

ETFs
provide
price
exposure
to
the
underlying
asset
without
the
complexities
of
custody
and
reporting,
making
it
easier
for
advisors
to
allocate
within
any
account
type,
integrate
investments
into
AUM
and
reporting,
and
facilitate
rebalancing,
as
do
public
company
investments.

Conversations
and
Portfolio
Allocations

Understanding
crypto
is
one
thing;
fitting
it
into
a
portfolio
is
another.
Advisors
shared
their
experiences
in
client
conversations
and
their
strategies
for
crypto
allocation.

These
discussions
often
involve
setting
realistic
expectations,
aligning
with
clients’
investment
goals
and
conducting
thorough
risk
assessments
to
gauge
tolerance
for
volatility.

We
heard
that
generally,
advisors
allocate
2-5%
of
a
portfolio
to
crypto,
categorizing
it
as
an
Alternative
Investment.
ETFs
have
enabled
advisors
to
discuss
the
benefits
of
rebalancing
and
its
positive
impact
on
portfolio
performance.

Advisors
must
also
determine
the
most
suitable
accounts
for
crypto
holdings,
whether
taxable
or
non-taxable,
such
as
IRAs.

Navigating
Compliance
and
Regulation

Crypto’s
intersection
with
politics
in
the
U.S.
adds
a
layer
of
complexity.
Positive
legislative
momentum
was
evident
just
before
Consensus,
with
several
Democrats
supporting
pro-crypto
regulation.

A
conference
highlight
was
a
keynote
chat
by
CFTC
Commissioner
Summer
Mersinger,
who
outlined
the
CFTC’s
perspective
on
crypto
regulation
and
its
implications
for
financial
advisors.
The
need
for
regulatory
clarity
remains
paramount
as
advisors
navigate
this
evolving
landscape.

Conclusion

Consensus
2024
underscored
the
growing
integration
of
crypto
in
financial
advisory
practices.
By
focusing
on
education,
practical
application
and
regulatory
insights,
advisors
are
better
equipped
to
meet
the
rising
demand
for
crypto
investments
and
guide
their
clients
through
this
dynamic
asset
class.

–


Adam
Blumberg,
Interaxis

Note:
The
views
expressed
in
this
column
are
those
of
the
author
and
do
not
necessarily
reflect
those
of
CoinDesk,
Inc.
or
its
owners
and
affiliates.