Ben Strack

<div id="highlights-block_625447e2895f1" class="highlights">
 <ul>
 <li>While 86% of financial pros plan to boost their crypto allocations in the next year, none plan to decrease</li>
 <li>Advisers, on average, report wanting to allocate 6% of a client’s total portfolio to crypto</li>
 </ul>
 
</div>



Nearly nine of 10 financial advisers investing in crypto expect to increase their allocations over the next year, according to a Nasdaq survey, though the approval of a spot crypto ETF would help speed further adoption.



The survey published Monday gathered input from 500 advisers who are currently or considering allocating to crypto. While 86% plan to boost their allocations to the space in the next 12 months, none plan to decrease over that span.



“This is significant because it shows that neither advisers nor their clients are feeling buyer’s remorse as a result of their decisions,” Jake Rapaport, Nasdaq’s head of digital asset index research, told Blockworks.



But 72% of advisers would be more likely to invest client assets in crypto if a spot ETF were offered in the United States, the survey found.



The Securities and Exchange Commission has not yet approved a product that invests directly in cryptocurrencies, such as bitcoin, and 31% of respondents said they find it unlikely that such a product will be approved this year.



Bloomberg Intelligence analysts <a href="https://cms.blockworks.co/is-a-change-to-exchange-definition-key-to-bitcoin-etf-approval/" target="_blank" rel="noreferrer noopener">have said</a> they do not expect a spot bitcoin ETF to be approved until mid-2023.



In the meantime, fund groups ProShares, Valkyrie Investments and VanEck last year launched ETFs that primarily invest in bitcoin futures contracts. The SEC <a href="https://cms.blockworks.co/sec-approves-bitcoin-futures-etf-filed-under-the-33-act/" target="_blank" rel="noreferrer noopener">last week approved</a> a bitcoin futures ETF from asset manager Teucrium filed under the Securities Act of 1933 — the regulation under which spot bitcoin ETFs are filed.



Half of the advisers already investing in crypto are allocating to bitcoin futures ETFs, and 28% plan to start using them in the next 12 months, Nasdaq discovered.



<h3>Who is allocating, and how?</h3>



About a third of registered investment advisers (RIAs) use crypto, compared to 19% of independent broker-dealers (IBDs) and 17% of wirehouse advisers.



Advisers, on average, report wanting to allocate 6% of a client’s total portfolio to crypto.



Roughly 70% would consider using an index fund for broad exposure, followed by sector-specific index funds (57%), actively managed funds (52%), individual digital assets (40%) and high-yield funds (31%).



Despite this, only 10% of advisers say they are very knowledgeable about crypto. Nasdaq partnered with asset manager Hashdex last month to launch a digital assets curriculum for financial professionals.



“There is so much room for educational growth on the subject,” Rapaport said, noting that asset managers, index providers and media publishers can all help narrow the gap. “What’s less surprising is that advisers know what they want, and they largely want access to passive investment products for their clients’ portfolios.”



Nasdaq launched its crypto index in February 2021. It allocated roughly 67% to bitcoin and nearly 30% to ether, as of March 1, as well as allocations of less than 1% to eight other cryptoassets.&nbsp;



“We continue to believe that the Nasdaq Crypto Index simplifies access to the entire asset class by adhering to principles that matter to advisers and investors,” Rapaport said. “We look forward to driving further innovation in crypto to support all types of investors.”



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<hr class="wp-block-separator">

Nasdaq Survey: Spot Crypto ETF Would Speed Adviser Allocation

<div id="highlights-block_61f068989a733" class="highlights">
 <ul>
 <li>Eaglebrook plans to expand to broker-dealer and wirehouse markets in 2022, CEO says</li>
 <li>Wealth management space has been “completely underserved” from a crypto product perspective, according to Castle Island Ventures Partner Sean Judge</li>
 </ul>
 
</div>



A cryptocurrency investment firm has raised an additional $20 million of capital as it devises new products for wealth management professionals.



The Series A investment round for Eaglebrook Advisors— a registered investment advisor (RIA) that specializes in separately managed accounts (SMAs) — was led by venture capital firms Castle Island Ventures and Brewer Lane Ventures. Other backers include Gemini’s Frontier Fund, Fidelity Investments affiliate Avon Ventures, Jump Capital and Sybil Capital.



“This funding gives Eaglebrook the opportunity to improve our technology and solutions for wealth management firms,” Eaglebrook CEO Christopher King told Blockworks in an email. “We will continue executing in the RIA market and plan to move towards the [independent broker-dealer] and wirehouse markets in 2022.”



Founded in 2019, Eaglebrook works with about 500 financial advisors and 40 RIAs in the US that allocate client capital to Eaglebrook SMAs.



Eaglebrook is focused on accelerating the adoption of crypto SMAs as the vehicle of choice for wealth management firms. Looking to go beyond bitcoin and ether, King said, the firm is looking to add products focused on decentralized finance (DeFi), layer-1 and layer-2 protocols, NFTs, gaming and yield opportunities.&nbsp;



Castle Island Partner Sean Judge told Blockworks that wealth management has been “completely underserved” when it comes to crypto products. As the wealth transfer from baby boomers to millennials accelerate, he added, advisors will look for new ways to serve the younger generation.&nbsp;



“From all the diligence we’ve done from talking with RIAs and asset managers, it’s pretty clear that they’re looking for a solution, and we believe that fundamentally over time they’re going to continue to look for a solution,” Judge said.



The US Securities and Exchange Commission (SEC) <a href="https://cms.blockworks.co/when-will-the-sec-approve-a-spot-bitcoin-etf/">has not yet approved</a> an ETF that would hold cryptocurrencies directly. The agency gave the go-ahead to<a href="https://cms.blockworks.co/first-bitcoin-futures-etf-nears-1b-on-first-day-of-trading/"> the first bitcoin futures ETFs</a> in October, though industry watchers have said such products may not be a great tool for advisors and long-term investors.&nbsp;



“From a product perspective, separately managed accounts are fundamentally just a better end product for clients,“ Judge said. “But also, what Eaglebrook has built from a technology perspective to integrate with the broader portfolio and integrate with all the other technology solutions that these financial advisors use is a really unique asset.”



The fundraise follows <a href="https://cms.blockworks.co/eaglebrook-ceo-advisors-the-lowest-hanging-fruit-for-crypto-market/">Eaglebrook’s announcement in November</a> that it would launch a crypto educational platform for advisors. King called the $30 trillion wealth management market at the time “the biggest elephant in the room and the lowest-hanging fruit” for the crypto industry.



<a href="https://cms.blockworks.co/financial-advisors-bullish-on-crypto/">A report published last week</a> by Bitwise Asset Management and ETF Trends found that the percentage of financial professionals investing client funds in crypto rose from 9% to 15% over the past year.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



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<hr class="wp-block-separator">

Startup Raises $20M to Bridge Crypto, Wealth Management

<div id="highlights-block_61aa518a8cdd9" class="highlights">
 <ul>
 <li>The RWM WisdomTree Crypto Index will allow financial advisors to execute this strategy through a packaged direct indexing solution</li>
 <li>Direct ownership of crypto assets through the index is a superior way to get exposure compared to yet-to-be-approved spot bitcoin ETFs, Onramp Invest founder says</li>
 </ul>
 
</div>



WisdomTree and Ritholtz Wealth Management have created an index designed to offer retail investors exposure to the crypto market through a financial advisor.



WisdomTree is an ETF issuer and asset manager managing roughly $76 billion assets globally, and Ritholtz Wealth Management is a New York City-based RIA that offers financial planning and asset management services to high-net-worth households, corporate retirement plans, endowments and charitable foundations.



The RWM WisdomTree Crypto Index is currently made up of 36% bitcoin (BTC), 20% Ethereum (ETH) and 4% each of 11 other crypto assets, which include payment systems, smart contract platforms, layer-2 protocols, oracle networks, crypto indexing services, decentralized finance and the metaverse.&nbsp;



Aside from BTC and ETH, the other coins <a href="https://www.wisdomtree.com/-/media/us-media-files/documents/resource-library/crypto-assets/rwm-wisdomtree-crypto-index-factsheet.pdf" target="_blank" rel="noreferrer noopener">within the index</a> are Fantom, Terra, Polygon, Uniswap, Aave, Sushi Swap, Yearn.finance, Decentraland, Enjin, Chainlink and The Graph.



“As wealth managers, we have a responsibility to adapt our portfolios to this burgeoning opportunity,” Michael Batnick, Ritholtz’s director of research, said in a statement. “As fiduciaries, we have an obligation to do so in a sensible way while harnessing the benefits of increased diversification.”



<h3>Offering advisors access to crypto</h3>



The index has been licensed to <a href="https://onrampinvest.com" target="_blank" rel="noreferrer noopener">Onramp Invest</a>, an integration platform that provides access to crypto assets for registered investment advisors (RIAs). It is available to financial advisors using its technology platform to manage separate accounts of clients.



Onramp Invest will supply the SMA architecture, rebalancing technology and customer support for financial advisors. <a href="https://www.gemini.com" target="_blank" rel="noreferrer noopener">Gemini</a>’s custody infrastructure and crypto-native exchange will drive the index’s creation, according to the firms.



The RWM WisdomTree Crypto Index is the best assembled structure and diversified crypto asset exposure currently available to US investors, and particularly the RIA community, argued WisdomTree Chief Investment Officer Jeremy Schwartz.



“Advisors have had a tough time getting access to crypto,” he told Blockworks, noting that there are not yet spot crypto ETFs in the US that they can buy through their brokerage accounts. “Retail is very much to direct, but it’s hard for advisors to manage that the way they manage their practice.”



The lack of crypto access for advisors was a key reason WisdomTree invested in Onramp Invest, Schwartz added. WisdomTree <a href="https://www.globenewswire.com/news-release/2021/05/25/2235508/18051/en/WisdomTree-Announces-Crypto-Model-Portfolios-for-Advisors-in-Collaboration-with-Onramp-Invest-which-features-Gemini-Integration.html" target="_blank" rel="noreferrer noopener">introduced crypto model portfolios</a> for advisors in May, which it noted at the time were available through Onramp Invest and with integration into Gemini.



Eric Ervin, co-founder and CIO at Onramp Invest, said there is $90 trillion of assets in the hands of RIAs and only a small percentage of them have gotten involved in crypto.&nbsp;



“Now we’re kind of opening that door so financial advisors can actually say yes when the client says, ‘Do you offer crypto asset exposure?’” he told Blockworks.



Ervin founded Reality Shares, an asset management firm, ETF issuer and index provider. The company <a href="https://medium.com/blockforce-capital/an-introduction-to-blockforce-capital-2062118c5821" target="_blank" rel="noreferrer noopener">became Blockforce Capital</a> in 2018.



“I literally sold my ETF company because the thought of creating another ETF that owned bitcoin was silly to me,” he explained. “It was like putting training wheels on a Ferrari when really what people need is the exposure in direct form and taking self-custody.”



Gemini allows that direct ownership of crypto assets, Ervin explained. The company became a qualified custodian chartered by the New York State Department of Financial Services (NYDFS) under Section 100 of the New York Banking Law. Gemini <a href="https://www.gemini.com/blog/gemini-crypto-under-custody" target="_blank" rel="noreferrer noopener">hit $30 billion in crypto under custody</a> in May.



“It’s not wrapping everything up in an ETF and hoping that it will get approved, but actually buying assets directly with a qualified custodian,” Ervin said. “We want to give [advisors] the education that [they] need because there’s still a lot of confusion about what is a qualified custodian.”



<h3>WisdomTree’s crypto-focused approach</h3>



WisdomTree has been focused on how blockchain can change the financial world, Will Peck, the firm’s head of digital assets, <a href="https://cms.blockworks.co/wisdomtree-plans-to-launch-more-crypto-offerings-in-2022/">told Blockworks last month</a>, noting that the firm is looking to bring more crypto products to investors in 2022.



WisdomTree CEO Jonathan Steinberg said during the company’s third quarter earnings call in October that he sees a big opportunity for advisors to give their clients crypto exposure through models and separately managed accounts in the US. He noted that the latter vehicle may be financial intermediaries’ preference amid regulatory uncertainty around crypto ETFs.



Though WisdomTree has filed to launch a spot bitcoin ETF in the US, the Securities and Exchange Commission (SEC) has not yet approved ETFs that would invest in crypto assets directly. <a href="https://cms.blockworks.co/sec-rejects-vanecks-proposed-spot-bitcoin-etf/" target="_blank" rel="noreferrer noopener">The agency last month rejected</a> fund manager VanEck’s proposed bitcoin ETF as its 240-day review period of the planned offering was set to expire.



WisdomTree has physically backed bitcoin and ether exchange-traded products (ETPs) available in Europe and <a href="https://cms.blockworks.co/wisdomtree-plans-to-launch-more-crypto-offerings-in-2022/" target="_blank" rel="noreferrer noopener">added</a> three spot crypto ETPs to its lineup of offerings in the region last week.



The trio of new ETPs track three different indexes. The Crypto Mega Cap Equal Weight index invests exclusively in bitcoin and ether while WisdomTree’s Crypto Market index exposes investors to a diversified basket of crypto assets representing about 70% of the cryptocurrency market capitalization, including BTC and ETH. The firm’s Crypto Altcoins offering excludes bitcoin and ether, as its index comprises assets such as cardano, bitcoin cash, litecoin, polkadot and solana.



The firm could look to expand its index offerings in the US beyond the RWM WisdomTree Crypto Index as the space continues to mature.



“There are all sorts of strategies you can do, but partly you don’t want to confuse the market and have too many choices,” Schwartz said. “As sectors evolve within crypto … those are all candidates of themes.”



<hr class="wp-block-separator"/>



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<hr class="wp-block-separator"/>

WisdomTree and Ritholtz Wealth Management Launch Crypto Index

Casey Wagner

<div id="highlights-block_61a94c355533f" class="highlights">
 <ul>
 <li>Flourish Crypto allows RIAs to access the growing digital asset market </li>
 <li>The platform now offers ethereum in addition to bitcoin in response to growing demand for more tokens </li>
 </ul>
 
</div>



MassMutual’s investment platform Flourish Crypto has added ethereum to its suite of assets, giving registered investment advisors (RIAs) greater access to the digital asset market, the insurance giant announced Thursday.&nbsp;



Flourish started about three years ago as Flourish Cash, a management solution that now works with about 420 RIAs around the country and represents more than a trillion dollars in total end-client assets. Flourish Crypto <a href="https://cms.blockworks.co/massmutuals-flourish-crypto-to-give-rias-direct-bitcoin-exposure/" target="_blank" rel="noreferrer noopener">launched</a> in September 2021 first with bitcoin as RIAs continued to express interest in digital asset investment opportunities. 



<blockquote class="wp-block-quote">“We started speaking with advisors about a year ago, and the change in demand over the last year has just been staggering,” said Ben Cruikshank, head of Flourish. “Today, virtually every single firm we&#8217;re speaking with is saying ‘we would like bitcoin and we would like ethereum, and we would like your perspectives on what&#8217;s coming next.’ I just can&#8217;t underscore enough how radically That conversation has changed really in just six to 12 months.” </blockquote>



Flourish Crypto has onboarded dozens of RIAs with an average assets under management of around $1 billion. RIAs generally have a difficult time accessing the crypto market on behalf of their clients because tokens cannot be traded on traditional brokerage platforms. The Flourish product has filled a significant gap in the market, Cruikshank said.&nbsp;



“We watched as crypto became a multi-trillion dollar asset class, we watched as 10s and 10s of millions of Americans are opening accounts or buying and selling cryptocurrencies,” he said.&nbsp; “And largely, when we spoke to RIAs, they felt like they were completely just left on the sidelines — that this whole crypto world was just moving past them.”



Flourish Cash helped the Flourish team start to understand the RIA community and build a cryptocurrency platform that met their needs, Cruikshank said.&nbsp;



“It is built with the flexibility they need around trading, transfers, regulatory and compliance considerations and integrations, client support, you name it,” he said. “We kind of customized the crypto solution for the adviser world so that RIAs could access crypto so that they could bring it to the client so that they can eventually help millions of millions of new Americans get what is often their first exposure to crypto.” 



<h3>Regulatory uncertainty</h3>



As different regulatory bodies in the US <a href="https://cms.blockworks.co/gensler-says-centralized-regulation-is-path-for-crypto/" target="_blank" rel="noreferrer noopener">continue to grapple</a> with how to approach and oversee the digital asset space, compliance issues have been top of mind for many RIAs, Cruikshank said. The US Securities and Exchange Commission (SEC) is the primary regulator for the RIA community, but the SEC has been fairly unclear about what the guidelines are around digital assets. 



“As an advisor being regulated by the SEC directly, making sure what you&#8217;re doing is in the lines of what your regulators are comfortable with is really, really important,” Cruikshank said.&nbsp;



In response to the uncertain regulatory environment, Flourish partnered with <a href="https://www.globenewswire.com/Tracker?data=QUXoa5aEC0WHNIU-He3Jso7AyQWkfSEndoA0Hmpbs8bJbia-xuv9IWeOR3SaGFioCEDrycopxto2hjWS2uMbcfjpQQG9wkDABa1FbIDZD4I=" target="_blank" rel="noreferrer noopener">Perkins Coie LLP</a>, an international law firm specializing in the financial technology, blockchain and investment management space, on a whitepaper that discusses regulatory and compliance considerations for RIAs looking to engage with cryptocurrencies. 



“If you think back to all the reasons that advisors cannot adopt crypto today, uncertain regulatory and compliance landscape is often one of the top three things on the list,” Cruikshank said. “Fortunately, we think there is certainly a path forward.”



In terms of what is next for Flourish Crypto, it is difficult to predict which tokens or cryptocurrencies may be added to the Flourish Crypto suite in the future, Cruikshank said. The SEC has determined that neither bitcoin nor ethereum are considered “securities&#8221; for the purpose of federal securities laws, but it is unclear how other tokens may be classified in the future. 



“Until there&#8217;s more regulatory clarity, you&#8217;re not going to see advisors adopting things too far out on that spectrum,” Cruikshank said. “With regards to additional tokens or additional cryptocurrencies, it is a slow but steady and very careful and very regulatory-first type of expansion.”



<hr class="wp-block-separator"/>



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<hr class="wp-block-separator"/>

MassMutual’s Flourish Crypto Adds ETH, Releases Regulatory Blueprint

<div id="highlights-block_6196aa28c4d00" class="highlights">
 <ul>
 <li>95% of financial advisors are not yet allocating to crypto, according to Eaglebrook CEO Christopher King</li>
 <li>Advisors firm has talked to prefer crypto separately managed accounts over offerings like the recently launched bitcoin futures-based ETFs due to lower tracking error, the executive said</li>
 </ul>
 
</div>



Volatility concerns and lack of education are keeping a large majority of financial advisors away from investing in crypto, said Eaglebrook Advisors CEO, Christopher King.



Eaglebrook, one of the largest crypto-focused separately managed account platforms, is launching a crypto educational platform for advisors as a way to inform them about the emerging $2 trillion asset class, the firm announced Thursday.&nbsp;



The company had been offering informal research and education since its launch in November 2020, King noted. But Eaglebrook has spent the last six months or so creating what it calls Eaglebrook IQ, an offering he said advisors and the C-suites of multi-billion-dollar wealth management firms were asking for.&nbsp;&nbsp;



About 95% of the advisor market has not yet invested in bitcoin or other crypto assets, King told Blockworks, presenting a large opportunity for increased allocation to the emerging asset class in the years ahead.



“The biggest elephant in the room and the lowest-hanging fruit for the crypto market is the $30 trillion wealth management market, which I think a lot of the market ignores,” he said. “[People] kind of view it as either retail or institutional, but everyone ignores the market in between, which is arguably larger than those two.”



<h3>The new offering</h3>



Eaglebrook IQ is available for free to more than 2,000 financial advisors across the United States, the firm noted.



&#8220;Advisors who are educated on digital assets are more likely to engage confidently with clients on this emerging asset class,” Nick Gerace, senior vice president of investments at Dynasty Financial Partners, said in a statement. &#8220;Interest in crypto investing has been on the rise and providing necessary education to our advisors has been incredibly helpful.&#8221;



The offering includes a two-hour training program detailing the merits and risks of bitcoin, ether and other digital assets, as well as weekly market commentary and research reports on topics such as decentralized finance, credit markets, and layer-1 and layer-2 protocols.



The firm also offers materials that advisors can send to clients who may decide to allocate a portion of their portfolio to Eaglebrook’s crypto SMAs.&nbsp;



“You can kind of go as high-level and crypto 101 with our training program and as deep as the DeFi market, lending protocols, total value locked and all that stuff,” King said. “It’s really important for advisors to have these education tools…readily available within one platform where they can become educated and allocate to the market in a secure, compliant and basically seamless way.”&nbsp;



<h3>The advisor shift to crypto</h3>



Eaglebrook connects with advisors in two ways, King noted.&nbsp;



While the firm works with some advisors that end up onboarding a portion of their clients, Eaglebrook has also begun connecting with the investment and operations teams of multi-billion-dollar registered investment advisers (RIAs) to add its crypto SMAs to their model portfolios.



This could include adding a 4% position into a custom multi-asset diversified crypto SMA across 1,500 client accounts, King offered as an example.



Clients demanding access to crypto through their advisers are forcing the leaders of some firms to at least consider moving into the space, King explained. A majority of advisors allocating to the asset class for the first time are seeking access to both bitcoin and Ethereum, he added.



“Making sure that they’re educated and have a way to move clients into the market in a secure way is really going to be important if they want to basically protect their practices and businesses over the next five to 10 years.”.



<h3>Crypto SMAs versus ETFs</h3>



More than 500 financial advisors are actively allocating to Eaglebrook&#8217;s crypto SMAs, the firm reported as King said some seeking the tax-loss harvesting and portfolio customization that the wrapper provides.&nbsp;&nbsp;&nbsp;



But the investment options for investors seeking exposure to crypto assets is increasing. Most recently, the US Securities and Exchange Commission allowed ETFs investing in bitcoin futures contracts to come to market.&nbsp;



The ProShares Bitcoin Strategy ETF (BITO), the first and largest, has grown to $1.4 billion assets under management <a href="https://cms.blockworks.co/bitcoin-futures-etf-surpasses-half-a-billion-in-volume-in-under-two-hours/" target="_blank" rel="noreferrer noopener">since launching one month ago</a>. Three similar offerings by fund managers <a href="https://cms.blockworks.co/valkyries-btf-trades-10m-in-first-5-minutes/" target="_blank" rel="noreferrer noopener">Valkyrie Investments</a>, <a href="https://cms.blockworks.co/vanecks-bitcoin-futures-etf-set-to-launch-tuesday/" target="_blank" rel="noreferrer noopener">VanEck</a> and <a href="https://cms.blockworks.co/global-x-offers-different-type-of-bitcoin-futures-etf/" target="_blank" rel="noreferrer noopener">Global X</a> are also now available.&nbsp;



King said that the money flowing into those funds is coming from self-directed investors rather than financial advisors and RIAs. Advisors are staying away from the products due to roll costs and contango &#8211; a situation where the futures price of a commodity is higher than the spot price, he explained.



“It doesn’t matter what the price of the futures-based ETF is; it could be free from a management fee perspective, but you’re paying 15% to 20% annually because of the roll and contango,” he said. “That is a major cost versus what we provide, which is direct ownership, which means there is minimal tracking error.”



Dave Nadig, director of research and CIO of ETF Trends and ETF Database, argued that the breakdown of what kinds of investors are putting money into the bitcoin futures ETFs is not yet known. He added that webinars related to BITO have had high advisor attendance.&nbsp;



“The point remains that BITO is primarily going to be a trading tool for individuals and institutions looking for quick and easy exposure on a regulated exchange, or for folks using options strategies,” Nadig told Blockworks. “The VanEck offering is potentially more interesting for advisors, because of the tax treatment and lower expense ratio.”



The SEC has not yet approved an ETF in the US that would invest in bitcoin or other crypto assets directly, most recently <a href="https://cms.blockworks.co/sec-rejects-vanecks-proposed-spot-bitcoin-etf/" target="_blank" rel="noreferrer noopener">rejecting a proposal</a> from VanEck.



<hr class="wp-block-separator"/>



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<hr class="wp-block-separator"/>

Eaglebrook CEO: Advisors the ‘Lowest-Hanging Fruit’ for Crypto Market

Sam Martin

<h2></h2>


<div id="highlights-block_6154e0881ed24" class="highlights">
 <ul>
 <li>Flourish Crypto will give independent Registered Investment Advisers (RIAs) a simple, secure and compliant way to offer direct bitcoin exposure to their clients</li>
 <li>The MassMutual-owned firm aims to provide RIAs with the flexibility needed for trades, transfers, billing and integrations to open up an emerging asset class to a new demographic of investors</li>
 </ul>
 
</div>



Today, there is immense competition in the field of wealth management with robo-advisors, trading firms and other competitors constantly expanding their product offerings to compete with traditional independent Registered Investment Advisers (RIAs).



Historically RIAs have been forced to sit on the sidelines and watch capital flow out of their sphere of control, but Flourish Crypto — the digital asset partner to Flourish Cash — intends to change that by allowing RIAs to take part in the rapidly emerging crypto industry.



Flourish Cash, a cash management account for individuals and RIAs that yields 0.24% in an FDIC insured account, currently handles over $1 trillion in assets under management. Roughly 400 RIAs currently use their product offerings.



As a subsidiary of insurance giant MassMutual, Flourish Crypto hopes to empower these RIAs to offer their clients exposure to digital assets.&nbsp;



<blockquote class="wp-block-quote">“Investment advisors are really left with three choices when their clients ask them how to gain exposure to digital assets,” Ben Cruikshank, head of Flourish, told Blockworks. “Either recommend an investment vehicle that often trades at discounts or premiums to NAV with high management fees, tell them to go to a retail exchange where they would no longer generate any revenue for managing their money, or simply tell them it is not an option.”&nbsp;</blockquote>



Initially bitcoin will be the only asset available for trade, but the hope is to make ether available to clients over the coming weeks.



Based on overwhelming feedback from potential users, Flourish opted to vet different custodial providers to take ‘physical’ possession of their clients’ crypto assets.



This is where Paxos comes in. As the custodian for Flourish Crypto, Paxos is required to hold all customer assets bankruptcy-remote and separate from corporate assets. Paxos is one of the few companies in the crypto industry that meets both <a href="https://paxos.com/2021/03/02/paxos-is-first-company-to-secure-soc-2-type-2-certification-across-suite-of-crypto-products-and-services/" target="_blank" rel="noreferrer noopener">SOC 1 Type 2 and SOC 2 Type 2</a> standards, and the first company to secure a <a href="https://www.dfs.ny.gov/reports_and_publications/press_releases/pr1505071" target="_blank" rel="noreferrer noopener">New York State Department of Financial Services Trust Charter for Digital Assets</a>, in 2015.&nbsp;&nbsp;&nbsp;



In addition, a vast majority of retail exchanges today do not provide 1099’s to their users in order to help them file their taxes. This is also where Flourish feels they can differentiate themselves and open up crypto to an entirely new demographic of investors, according to Cruikshank.



Tim Corbett, CIO at MassMutual, said in a statement released today: “We decided that it was imperative to invest in cryptocurrency itself and to begin to lay the groundwork for ways we can incorporate it into our business. This includes offerings and technology initiatives across the company, such as today’s launch of Flourish Crypto — a cryptocurrency investing solution built for Registered Investment Advisors (RIAs) and their clients.”



It’s not only MassMutual that sees the opportunity for crypto and RIAs.&nbsp;



Matt Hougan, chief investment officer, Bitwise, <a href="https://cms.blockworks.co/qa-why-bitwise-believes-indexing-is-a-superior-crypto-strategy/" target="_blank" rel="noreferrer noopener">previously told</a> Blockworks that the financial advisor market is a huge opportunity for the digital asset industry and growing fast.



“By most estimates it’s as large as the institutional market, and it’s many times larger than the self-directed retail market,” said Hougan. “It’s a hard market to serve in that it requires education and support and a national distribution team, but I do think the crypto industry has perhaps been overfocused on the institutional market and not on the advisor market, which built a huge swathe of the ETF ecosystem into the multi-trillion-dollar market that it is today. That’s one fact that I think is not commonly understood.”

MassMutual’s Flourish Crypto to Give RIAs Direct Bitcoin Exposure

<div id="highlights-block_614cd2425e335" class="highlights">
 <ul>
 <li>Blockchange CEO said he expects a vast majority of assets will be tokenized in the next five to 10 years</li>
 <li>Latest alliance builds upon Blockchange’s relationship with Gemini Trust Company</li>
 </ul>
 
</div>



Blockchange has partnered with Equity Trust Company to allow financial advisors and asset managers to bring digital assets to the retirement accounts they serve. 



The San Francisco-based company’s platform, BITRIA, enables asset managers, registered investment advisors (RIAs) and financial advisors to offer 40 different digital assets to their clients as another form of professionally managed investments. Equity Trust is one of the largest alternative asset custody providers for retirement accounts.



The latest partnership builds upon Blockchange’s relationship with Gemini Trust Company, which facilitates custody of digital assets for its platform users, as Equity Trust will allow Blockchange customers account custody services for digital assets in tax-advantaged IRAs.



“IRAs comprise a large portion of RIAs&#8217; AUM, so the Equity Trust integration with Blockchange paves the way for more investors to enjoy the benefits of the crypto marketplace,” Dave Abner, Gemini’s global head of business development, said in a statement.



Blockchange CEO Dan Eyre said that one thing traditional finance does well is customer service, an attribute he noted is currently lacking in the digital assets space.



<blockquote class="wp-block-quote">“When you look at how the market is evolving, there hasn’t been a lot of interest yet in advisors, fiduciaries, asset managers … because they’re almost the highest regulated industry out of all of them,” he told Blockworks in an interview. “When they go into an endeavor like this … they’re expecting certain things to be in place, and if those things aren’t in place it feels very risky for the organization.”</blockquote>



The alliance with Equity Trust allows for transfers to happen in less than a week compared to wait times to get invested of 30 to 45 days with other IRA custodians in the space, Eyre said.



Equity Trust&#8217;s integration with BITRIA provides IRA holders with incoming funds transfers through Automated Customer Account Transfer Service (ACATS) in less than a week. This compares to wait times of 30 to 45 days with other IRA custodians in the space, Eyre said, adding that moving as fast as possible is critical in a volatile asset class.



<div class="wp-block-image"><figure class="aligncenter size-full"><img decoding="async" loading="lazy" width="370" height="260" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Dan-Eyre-copy-pdjtowwmveb7cynz698ng5n783sap6lm3b47bsouy0-1.jpeg" alt="Dan Eyre, Blockchange" class="wp-image-8502" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Dan-Eyre-copy-pdjtowwmveb7cynz698ng5n783sap6lm3b47bsouy0-1.jpeg?w=370 370w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Dan-Eyre-copy-pdjtowwmveb7cynz698ng5n783sap6lm3b47bsouy0-1.jpeg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Dan-Eyre-copy-pdjtowwmveb7cynz698ng5n783sap6lm3b47bsouy0-1.jpeg?w=366 366w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Dan-Eyre-copy-pdjtowwmveb7cynz698ng5n783sap6lm3b47bsouy0-1.jpeg?w=312 312w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/Dan-Eyre-copy-pdjtowwmveb7cynz698ng5n783sap6lm3b47bsouy0-1.jpeg?w=80 80w" sizes="(max-width: 370px) 100vw, 370px" /><figcaption>Dan Eyre, CEO, Blockchange</figcaption></figure></div>



&#8220;As the demand for cryptocurrency and other digital assets continues to surge, it&#8217;s advantageous for advisors to be prepared with a solution for clients who want to diversify into this asset class,” Equity Trust CEO George Sullivan said in a statement.



Matthew Hougan, chief investment officer of Bitwise Asset Management, <a href="https://cms.blockworks.co/qa-why-bitwise-believes-indexing-is-a-superior-crypto-strategy/" target="_blank" rel="noreferrer noopener">previously told Blockworks</a> that the financial advisor and RIA market is the next big market to move into crypto, but that they require a lot of education and support to navigate the asset class. He noted at the time that he believes the crypto industry has been a bit overfocused on the institutional market.



Eyre said he believes that a vast majority of assets will be tokenized in the next five to 10 years, and advisors will need the tools to access those tokenized assets in a compliant and packaged way.



“We want to create that layer that advisors use to engage with the tokenized economy,” he added. “We have all of those in place today for crypto and digital assets as we know them now, but that’s just the tip of the spear for the coming wave of tokenized assets that we see advisors and their clients having great demand for.”



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Are you a UK or EU reader that can’t get enough investor-focused content on digital assets?<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a>&nbsp;in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.



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