Crypto for Investment Advisors

Earlier today a friend asked me a question about how blockchain/crypto fits into broader investment trends for TradFi investors. My friend is an IA and the genesis of the question was his desire to position his clients to participate from the big trends he sees over the next few years. The seemingly simple question turned into a longer conversation than he expected — as anyone in the space knows, blockchain/crypto is a lot of things, but easily categorizable is not one of them.

I won’t recount the specifics of the conversation, but these are some of the considerations and the end result.

1) Are the assets easily investable for TradFi investors? Most TradFi investors are not setup for direct investing.

a. Are tokens the only way to invest?

b. Are there equities or funds (think Grayscale) that provide exposure?

2) Is the space unique or does it fit into broader trends?

a. Can we treat the whole space as a singular asset class?

b. If it isn’t, can facets be broken up into existing trends?

3) Most crucially, fiduciary responsibility!

a. Is it an appropriate investment for the clients?

b. Cannot overlook suitability due to promise of returns

So where did we decide to categorize blockchain/crypto? In multiple buckets — first split them out by suitability, then by availability of investing vehicles. Afterward, and the crux of my response to my friend’s question, the space is not monolithic and should be split, where appropriate, into his existing investment trends (eg miners could be infrastructure; PFP NFTs could be social transformation).

There is no one size fits all solution, and how you eventually group them depends as much on your situation and as it does your view of the future. While some might find this frustrating, this nuance keeps the space exciting (and gives IAs another service offering for their clients).

As a final thought: please keep in mind that care must be taken when investing in the space.

#blockchain #cryptocurrency #crypto #investing