Advisors Limiting Access to Spot Bitcoin ETFs

Carson Group’s decision to limit financial advisor and investor access to four of the 10 new spot bitcoin ETFs is described by one of the biggest cryptocurrency proponents as a responsible strategy in light of the funds' brief track record and inherent risks.

“This is a common approach among RIAs, and a smart one,” said Ric Edelman, founder of the Digital Assets Council of Financial Professionals.

Carson Group, a $30 billion mega registered investment advisory firm based in Omaha, Nebraska, narrowed the list of spot bitcoin ETFs for use by the firm’s advisors by weighing asset growth, trading volume and fees.

Those four funds are the $6.5 billion iShares Bitcoin Trust ETF (IBIT); the $4.76 billion Fidelity Wise Origin Bitcoin ETF (FBTC); the $1.18 billion Bitwise Bitcoin ETF (BITB), and the $100.6 million Franklin Bitcoin ETF (EZBC).

Grant Engelbart, vice president and investment strategist at Carson Group, said in an interview the narrowed list was approved by an “internal due diligence committee,” and that the decision was based on “a variety of metrics such as institutional adoption, ETF specific characteristics such as assets, expenses, trading characteristics, and firm history in the digital asset space.”

Mega RIAs Stay Cautious on Crypto

Merit Financial Advisors, an Alpharetta, Georgia-based RIA managing $10 billion, is also taking a cautious approach to the new spot bitcoin ETFs.

Merit chief investment officer Brian Andrew said they are following the lead of LPL, the nation’s largest independent broker-dealer.

"We are limiting purchases to the same products available on LPL,” Andrew said. “They currently are only allowing Grayscale funds. We are in the process of building a policy that will open up the number of funds available based on their volume, ability to track the spot rate and cost.”

In the immediate wake of the Jan. 11 launch of the spot bitcoin ETFs a number of major brokerage platforms refused or restricted access, including Vanguard Group, Citigroup Inc., Bank of America Corp’s Merrill Lynch, State Street Corp., UBS Group AG and Edward Jones.

Edelman said there are multiple reasons to limit access to the list of spot bitcoin ETFs that all launched on the same day last month.

“It’s more manageable for the practice and shows clients that you’re being both thoughtful and helpful,” he said. “Your due diligence process has done the work for them; improving your value-add to clients. No RIA makes every S&P 500 index fund available for use and there’s no reason to let advisors use all of the spot bitcoin ETFs, either.”