What You Need to Know
- The SEC's approval of crypto exchange-traded funds is “inevitable,” says the advisor.
- SEC approval of a Bitcoin ETF would give advisors the the ability to solicit and recommend Bitcoin, he says.
- Until then, he'll continue to educate clients about cryptocurrencies, including self-custody.
Douglas Boneparth, president of New York-based RIA Bone Fide Wealth, believes it’s only a matter of time before financial advisors can comfortably recommend Bitcoin for client portfolios — and that time will come when the Securities and Exchange Commmission approves a Bitcoin ETF.
“It’s inevitable,” said Boneparth, a certified financial planner.
Currently eight Bitcoin ETFs are pending before the SEC, which has rejected previous ETF filings. But cryptocurrency enthusiasts hope that will change with the confirmation of Gary Gensler, a former MIT professor and expert on blockchain technology and digital currencies, as SEC chairman.
SEC approval of a Bitcoin ETF would be a “seminal event,” providing advisors with the capacity and the ability to solicit and recommend Bitcoin as an investment, said Boneparth.
The advisor is no stranger to Bitcoin, having mined some in 2014 with a friend, who took care of the actual computations and electric bills. Boneparth continues to hold onto that stash in his own digital wallet — he won’t divulge how much — but says he currently educates clients about Bitcoin rather than recommending it due to regulatory scrutiny.
“I can share what I’ve learned with clients, about the risk profile and how to think about having Bitcoin in their portfolios,” said Boneparth, noting there are no regulatory constraints on doing so.
The biggest risk to owning cryptocurrencies is price volatility, Boneparth said. “Clients need to be able to stomach big fluctuations in the price of Bitcoin and other cryptocurrencies, which typically experience 10% to 20% corrections.”
Many of his clients, high-income earners age 28 to 42, approach him about investing in Bitcoin. “They know I own Bitcoin,” he said. A good number of them — 15% to 20% — already own cryptocurrencies — Boneparth says.
Boneparth educates clients about Bitcoin and other cryptocurrencies, including self-custody, but he will not advise them to own cryptocurrencies today. “I recommend they do their research on the ways to invest in crypto and find the solution that’s right for them, but I also break down how fee structures work at various exchanges or through trusts,” the advisor said.