Financial advisors should be watching blockchain technology carefully given the growing interest by investors in new exchange traded funds in the sector.
Advisors need to provide more specific knowledge to investors about the technology and realize that regulators appear more interested in the industry, too, according to specialists in the field.
Recently, in a single week, investors put approximately $240 million into two new blockchain-themed ETFs, which launched on January 17.
Amplify Transformation Data Sharing ETF (BLOK) increased to $164.9 million from $2 million, according to reports from FactSet and CNBC. On the other hand, the Reality Shares Nasdaq NexGen Economy ETF (BLCN) jumped nine times in a week to $86.27 million, the reports add.
Experts urge that advisors get more familiar with blockchain, its opportunities and possible risks, because investors want answers to questions on the possibly-volatile sector.
“We expect with a variety of blockchain ETFs currently available — and soon to launch — there will demand for financial advisors to provide insight into which one is most appropriate and why,” Todd Rosenbluth, director of ETF research at CFRA, told ThinkAdvisor.
Meanwhile, Jamie Hopkins, a professor at The American College of Financial Services, said blockchain and cryptocurrency holdings “are drawing serious money right now.”
“They are hot. People are interested. If anything, some clients just don’t want to miss out. They want to talk about how they tried and were part of it all,” he said.
“The reality is that companies, businesses, and start-ups are just now starting to figure out how to use blockchain technology in a beneficial way,” Hopkins added. “Almost every large financial service company I work with is looking at how blockchain can benefit them. They all have taskforces and, in some cases, entire internal departments trying to figure it out.”