Arbor Digital and Blockchange Launch Separately Managed Accounts for RIAs

As bitcoin extended its Tesla-fueled rally to hit a record $48,000 Thursday, registered investment advisers are feeling the pressure to get their clients exposure to digital assets, something that has been historically difficult to do.  Digital investing platform Blockchange partnered with […]

article-image
share

key takeaways

  • The separately managed account will help registered investment advisors gain digital asset exposure for their clients
  • The investment vehicle is the first of its kind and will provide access to a variety of digital assets

As bitcoin extended its Tesla-fueled rally to hit a record $48,000 Thursday, registered investment advisers are feeling the pressure to get their clients exposure to digital assets, something that has been historically difficult to do. 

Digital investing platform Blockchange partnered with Arbor Capital Management to launch the True Digital Asset Separately Managed Account, an investment vehicle designed to give clients diversified exposure to digital assets, earlier this month. 

“Arbor’s True Digital Asset SMA marks the emergence of the first SMA that creates value for investors across the entire asset class, rather than being limited to just Bitcoin or Ethereum,” said Dan Eyre, CEO of Blockchange, in the firm’s announcement. “This space is growing fast and it’s critical for firms to select partners that are equipped to meet future needs, rather than just the needs of the moment.” 

RIAs could send clients seeking digital asset exposure to an exchange like Gemini or Coinbase, but these operate outside the RIA’s existing brokerage platform and often come with added transaction fees, Eyre said. There are also a variety of cryptocurrency exchange-traded products, like Grayscale’s Bitcoin Trust (ticker GBTC), but investors are forced to pay high premiums

“Arbor began looking in 2018 for solutions for our own clients. And at the time, it was pretty limited,” said Matthew Kolesky, president of Arbor, during a recent RIA Digital Assets Council webinar. “This SMA is a solution we can offer our clients that eliminates the premium risk, and they can own the asset in an account in their name.” 

The True Digital Asset SMA operates similarly to a Digital Turnkey Asset Management Platform, but unlike DTAMPs, SMAs do not require RIAs to actively manage the assets. 

“If it’s going to be a five percent allocation within your client’s portfolio, do you really want to spend 20 or 30 percent of your time keeping up with the market managing?” said Eyre. “Most advisory firms are not going to want to do that and that’s why the SMA approach is a good one.” 

Arbor’s SMA launch comes amid a series of new bids for a cryptocurrency exchange-traded product, which would offer an additional way for RIAs to expose clients to digital assets.

Alternative asset management firm Valkyrie filed for a bitcoin ETF last month, although the Securities and Exchange Commission has never approved a digital asset ETF.

“I believe that we are going to see a Bitcoin ETF within 18 months, and I’ve been saying that for five years,” said Ric Edelman, founder of RIA Digital Assets Council. “We’re all looking forward to a Bitcoin ETF, but we have to ask ourselves, by the time it comes out, what’s the price of bitcoin going to be? And how much upside might we be continuing to miss by saying ‘I’m not going to engage until there’s a Bitcoin ETF?'”

Image result for dan eyre blockchange
Dan Eyre, Blockchange
Tags

    Upcoming Events

    Salt Lake City, UT

    WED - FRI, OCTOBER 9 - 11, 2024

    Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

    recent research

    Screenshot 2024-05-23 091855.png

    Research

    Bitcoin L2s aim to boost scalability while preserving decentralization and security, unlocking a better user experience, and new avenues for Bitcoin-powered innovations. However, no existing Bitcoin L2 leverages the full security of Bitcoin.

    article-image

    Sponsored

    The convergence of AI and blockchain on Polkadot represents a groundbreaking opportunity for investors and developers alike

    article-image

    The company is making public a previously private offer rejected by Bitfarms’ board of directors last month

    article-image

    Semler Scientific, a publicly traded medical tech company, joined MicroStrategy by buying up millions of bitcoin

    article-image

    As someone who’s been knee-deep in the trenches of blockchain development, I can’t help but wonder if these behemoths are really cutting it anymore

    article-image

    UNI and MKR are suffering from the successes of their respective protocols

    article-image

    Maybe there’s no silver bullet to avoiding most tokens dumping after launch…