Edelman, Other Players on Cusp of Crypto-Related Offerings

The launch likely will take place in May, he added. “We have some really big news coming in terms of the people that agreed to partner with us. People will be really impressed when they see some of the traditional vendors that we’re going to launch with and some of the things we’re going to announce. We’ve gotten into Fort Knox so to speak.”

Earlier RIA Moves

Overland Park, Kansas-based Mariner Wealth Advisors became the first RIA to make the Eaglebrook Bitcoin separately managed account available to its advisors and their clients in November, after it privately launched the offering to a group of clients a year ago. At the time, Mariner had about 340 advisors and $35 billion in assets under advisement.

Other firms that have waded into the crypto waters include Fidelity Investments, which disclosed in August that it planned to launch a Bitcoin fund for accredited investors, adding its establishment name and star power to the fledgling and often controversial asset class.

When asked why more RIAs haven’t rolled out cryptocurrency offerings, Tiburon Strategic Advisors chief Chip Roame said: “Many RIAs have a streamlined business model that has them holding almost exclusively ETFs and [mutual funds]. The existing digital assets products are not that, and have additional fees built in, [which is] not congruent with many RIA models.”

Also, Roame explained, many RIAs rely on their custodians (like Schwab and Fidelity) to “determine the available products, with many RIAs choosing not to invest client funds in products that cannot be held in such custodians’ accounts for simplicity reasons.”

Toronto-based CI Financial, which has acquired U.S. RIAs with about $55 billion in assets, says it was “an early entrant into the crypto space in Canada” with the launch of the Galaxy Bitcoin Fund in December. Last week, it introduced the Galaxy Bitcoin ETF on the Toronto exchange with a management fee of 40 basis points.

Today in the U.S., the only options are found in trust or private placement structures available for 200 basis points, the firm says.

“These vehicles simply do not have the convenience, flexibility and better liquidity that an ETF structure can provide,” CI Financial CEO Kurt MacAlpine said in a statement. ”As one of the fastest growing U.S. RIA platforms, coupled with our expertise in crypto, we think we can be a natural leader in this space. We do see the adoption of crypto offerings in the U.S. RIA space as a likely development as options expand and fees compress.”

‘Tidal Wave’

While some industry voices, like that of Edelman, “have been beating the Bitcoin drum for years, … acceptance has been slow,” said Craig Iskowitz, founder of the consultancy Ezra Group.

“Wall Street firms and banks were initially very skeptical about Bitcoin (Jamie Dimon called Bitcoin a fraud in 2017) but have flipped their opinions based on internal pressure from their own analysts, who see institutional acceptance growing as well as clients who are demanding access to this new asset class in their portfolios,” Iskowitz explained.

Edelman has pointed out that the Grayscale Bitcoin Trust is wildly popular with millennials, the consultant says. “But since the average age of RIA clients is 57, they’re not hearing this drumbeat yet.”

Despite these and other hurdles, “I think you will see a tidal wave of RIAs jumping in once the first U.S. Bitcoin ETF is available,” he explained. “RIAs understand ETFs and how they work. But by then, Bitcoin could be at $100K, and they’ll all be kicking themselves for missing out on the early run.”