How Advisors Can Navigate Their Fiduciary Duty in the Crypto Market
Advisors need to adapt to the growing interest in cryptocurrency from their clients and understand the risks and benefits of investing in this asset class. Ignorance is no longer an option for financial professionals.
Key Points:
- Advisors must continually add to their knowledge to meet their professional obligations and discuss cryptocurrency intelligently with clients.
- The market has matured, allowing for better information about different tokens and more regulated service providers.
- Concerns about volatility, informed decision-making, custody, valuation, and regulation should be considered when advising on cryptocurrencies.
- The approval of regulated crypto products and services, such as ETFs, spot bitcoin exchange-traded funds, and regulated trading platforms, is proof of the mainstreaming of cryptocurrency as an investable asset class.
- Financial professionals must be able to provide intelligent and responsible advice on cryptocurrency investment to meet their fiduciary duties.
Setting up Business to Support Crypto
Private capital management firms can support clients in investing in crypto assets by providing a structure where clients own the assets directly and placing the capital and coins in accounts with custodians. Meeting tax and reporting requirements is essential.
Hot Take:
The growing interest in cryptocurrency and the increasing mainstream acceptance of crypto as an investable asset class means that financial advisors can no longer ignore this space. They must educate themselves and provide intelligent advice to meet their fiduciary duties to clients.
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