A new Bitcoin ETF is collecting cash, but not from financial advisors. Here's why:

“For advisors, I don’t think that’s the case.” [the launch of the new ETFs] Something changes,” Apkarian said. “We couldn't recommend these products before, and we can't recommend them now.”

That's certainly the case at four national brokerages known as wirehouses.Merrill Lynch, Morgan Stanley
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UBS
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Wells Fargo and Wells Fargo both have policies in place that provide that advisors can respond to unsolicited inquiries from clients about Bitcoin ETFs and make investments on their clients' behalf, but this topic It is not allowed to actively take up the issue.

Customers using those companies' independent online investment platforms, such as Morgan Stanley's E*Trade and Wells Fargo's WellsTrade, can also invest in the fund.

“Spot Bitcoin ETFs can be purchased unilaterally through Wells Fargo Advisors advisors or our online Wells Trade platform,” a Wells Fargo spokesperson said.

A survey of 10 companies operating across various wealth channels reveals nuanced policies regarding Bitcoin ETFs and significant reluctance to discuss the issue in detail. became.

UBS said some, but not all, of its 11 Bitcoin funds are available, but only to brokerage clients and not to advisory accounts.

In the area of ​​registered investment advisors, a spokesperson for Wealth Enhancement Group acknowledged that it has policies governing when advisors can help clients invest in Bitcoin ETFs, but the company did not provide further details. Didn't mention it.

A representative for Mariner Wealth Advisors said the company does not have anyone available to discuss bitcoin policy immediately.

Fidelity, which offers its own Bitcoin ETF product, said the fund saw record levels of flows and activity across investor segments. Fidelity says its retail advisors can help customers invest in Bitcoin funds upon request, but they must sign what is called a “designated investment agreement,” which Fidelity uses for certain complex or high-risk products. It states that there is.

Spokespeople for Raymond James and Edward Jones did not respond to requests for comment. Executives at LPL Financial were not immediately available for comment.

Several financial services people contacted for this article, some of whom did not wish to be named, said interest in a Bitcoin ETF increased after the Securities and Exchange Commission approved the fund in January. However, no one considers this to be an event that increased interest in Bitcoin ETFs. Advisors were suddenly inundated with calls from clients wanting to buy digital assets, and the floodgates opened.

“The SEC’s approval of Bitcoin ETFs was a huge step in removing a significant barrier to entry for Bitcoin,” said Will McGaw, investment director at Prime Capital Investment Advisors. But it was mainly a matter of logistics. In other words, by putting your assets into an ETF wrapper, you could suddenly trade them directly without going through futures contracts. “Across our platforms, we are not seeing widespread or even material demand for digital assets. However, that could change as people follow the headlines.” [and] Bitcoin continues to hit new highs. ”

McGough said Prime Capital does not include Bitcoin ETFs in its public market strategy and has received reports of only “a small number of questions from advisors who want to hold Bitcoin on behalf of their clients.” .

“In general, we view Bitcoin as a barometer of market speculation rather than a true core asset, digital gold with no cash flows of value,” he says.

Risk and reward. Although Bitcoin was launched in 2009, cryptocurrencies are still considered a novel and speculative asset class by many financial experts. Nothing in the boom-and-bust cycle of the past few years has been punctuated by dramatic revelations of large-scale fraud and a steady backdrop of busts of small-scale schemes, but risk aversion. Nothing made type advisors more receptive to digital currencies.

Vinod Jain, strategic advisor at Datos Insights, said the ETF approval “may have given financial institutions additional peace of mind.” But Bitcoin is still “a new asset class, and when it comes to offering it, it's not fully specified from a compliance perspective,” Jain said.

“I think a lot of traditional advisors see cryptocurrencies as having more risk than reward,” said David Richel, a partner at compliance consultancy ACA Group.

He said advisory firms typically apply the same vetting processes to cryptocurrencies as they do to other new types of investments, but those policies were already in place before the ETF debuted.

“I didn’t see much conversation about changing policy, which meant people had already made their choices regarding Bitcoin and other cryptocurrencies, and the existence of ETFs was not going to change their policies. ,” says Richelle. “I feel like most investment advisors probably already picked sides on Bitcoin and cryptocurrencies before the ETF came out, which is why there hasn't been much movement since the ETF. [approval] of funds. ”

So what could change the outlook for the entire industry? For one thing, experts say it will take a little more time, but Bitcoin, which hit new all-time highs this week, has seen an increase in entry rates. He points out that sometimes it can seem difficult to find the point.

After FTX's spectacular collapse and the government's massive settlement with Binance, cryptocurrencies remain unexplored territory in the eyes of many financial experts. And until Congress and regulators establish meaningful oversight of this area, it's likely to remain an aside, at best a footnote in customers' financial plans.

“I think the only way things will change from what they are now is if there is significant regulation around digital assets,” Cerulli’s Apkarian said. “For us to make any significant changes, it needs to become a very highly regulated space.”