Advisors Cornered By Crypto

[ETF Pulse appears Mondays and Thursdays. Drew Voros is Editor-in-Chief of ETF.com.]

An animal, or a human, being cornered in a panicked situation can be dangerous. They act out of fight or flight, more instinct than intellect. Not a lot of solutions if you're backed into a corner.

No game plan leads to being cornered.

A lot of advisors are being cornered by crypto because they have no game plan now and never did. It has been brushed off. They're not even “conversant” in any topic relating to bitcoin, Ethereum or DeFi as a whole. 

This has nothing to do with selling anything. There’s a new language that's evolved over the last 10 years in the financial services world. Learn it as an advisor or … well, good luck with that.

I met Tyrone Ross Jr., an investment advisor and CEO of Onramp Invest, a technology company providing access to crypto assets for registered investment advisors, a few years ago in San Diego. I was lucky enough to draw Ross in the panel I was moderating, “Bitcoin vs. Gold.” He made my job easy and stole the show.

‘Crypto Conversant’

I talk to Ross from time to time and there’s one word he always uses. And as a journalist, I think it’s a great buzzword we don’t say enough: “conversant.” His mission is to not sell bitcoin, but to educate advisors on the topic and help them become conversant on the subject. 

And yes, his firm can help you as an advisor set up everything a firm needs to handle crypto trades. He offers advisors information and education for free, or as he calls it, “free jewelry.” Buy the services if you need them.

Our October ETF Report that's coming out in a few weeks will feature Ross and others. While editing it this week, I spotted ETF.com’s Sumit Roy’s excellent interview with him and this caught my eye because it's so simple:

ETF.com: Why should advisors care about crypto at all?

Tyrone Ross Jr.: They should care about it because their clients own it—and clients are seeing it everywhere, and they're going to have questions. Who cares if you think it's tulips or not? You should be conversant. ….  they should care because it’s going to completely revolutionize our business as advisors. Our business is going to look a lot different in the future due to crypto.”

No More Excuses

Sure, several ago a financial advisor could tell a client: “Let’s tread lightly on this wacky bitcoin stuff. Seems risky as hell and no safeguard (waving of hands) and all these digital passwords and shady exchanges… scary. Hackers prey on this…”

In 2013, Cameron & Tyler Winklevoss audaciously came to the SEC table with a bitcoin ETF proposal that to this day gives the regulatory agency conniption fits. (Read: ‘Facebook Twins’ Back Bitcoin ETF Plan)

From ETF.com’s Cinthia Murphy back in that day:

“Cameron and Tyler Winklevoss, the brothers who first gained notoriety for their claimed involvement with Facebook, have filed paperwork with regulators to market a bitcoin ETF, hoping to put a low-cost, tradable ETF wrapper around the “cryptocurrency” for the first time.”

Back then it made sense to slow-roll, and the SEC’s pace has been virtually glacial. But now, on every side of this argument, there are no more excuses for doing nothing, not for the SEC or advisors or investors.

Plenty Of Regulatory Guidance

More than eight years after the first bitcoin ETF filing, we still have no U.S.-listed exchange traded bitcoin product. Many other countries, including Canada, do.

This gives advisors a false cover of ignorance … “hey, this is not an SEC-regulated security.”

“(T)here's plenty of guidance from the SEC. Just to recap it really quick: The IRS says bitcoin is property; the SEC says bitcoin and ether are nonsecurities; and the CFTC says, for their purposes, bitcoin is a commodity…. – Ross

Tyrone Ross is actually pretty indifferent when it comes the question of bitcoin ETFs ever launching. He prefers buying bitcoin directly but acknowledges many advisors may be more comfortable with cryptocurrency if it’s in an ETF wrapper. Whether or not that ever happens, we at ETF.com have built the framework for a section geared to advisors needing to learn more about this space. There is a lot more coming here… stay tuned:

Drew Voros can be reached at [email protected]