Consensus 2024, held in Austin, had a special session for financial advisors and registered investment advisors (FA/RIA) where approximately 120 professionals gathered to learn about digital assets. The event was closed-door but some key themes are worth sharing. The main focus was on practical integration of cryptocurrencies into financial practices rather than technical details.
One important takeaway was the emphasis on education. Both advisors and investors need to understand the available options, strategic allocation, investment theses, regulatory landscape, and compliance requirements. This knowledge gap needs to be addressed to have informed conversations and make confident crypto allocations.
Various investment options were discussed during panel sessions, including direct ownership, custody through SMA platforms, ETFs, and investments in public companies related to crypto. Each option has its own benefits and drawbacks, so advisors need to carefully consider which option suits their clients’ needs and goals the best.
When it comes to portfolio allocations, advisors typically allocate around 2-5% of a portfolio to crypto, categorizing it as an Alternative Investment. ETFs have made it easier for advisors to discuss rebalancing and its impact on portfolio performance. It’s also crucial to determine the most suitable accounts for crypto holdings, whether taxable or non-taxable, like IRAs.
Navigating compliance and regulation is another challenge for advisors, especially with the evolving political landscape in the U.S. Positive legislative momentum was seen just before Consensus, indicating a shifting perspective towards pro-crypto regulation. CFTC Commissioner Summer Mersinger outlined the CFTC’s perspective on crypto regulation and its implications for financial advisors, highlighting the need for regulatory clarity.
Overall, Consensus 2024 highlighted the growing integration of crypto in financial advisory practices. By focusing on education, practical application, and regulatory insights, advisors can better meet the increasing demand for crypto investments and guide their clients through this dynamic asset class.
In other news, Robinhood announced its acquisition of crypto platform Bitstamp for $200 million, showcasing the continued interest in the crypto market. U.S. spot bitcoin ETFs now hold a combined $63 billion of assets under management, indicating a significant growth in the sector over the past six months.
It’s important to note that the views expressed in this article are those of the author and may not necessarily reflect the views of CoinDesk, Inc. or its affiliates. Stay informed and continue learning about the evolving world of cryptocurrency to make informed decisions in your financial advisory practices.