Blockchange Inc., a leader in digital asset investing solutions for financial advisors, recently announced the launch of a new strategic alliance with Equity Trust Company, an alternative asset custody provider for retirement accounts.
According to a press release issued by Blockchange, the new partnership with Equity Trust will enable Blockchain’s users – principally financial advisors at registered investment adviser (RIA) firms and family offices, as well as large asset managers – to meet increased demand for digital assets in tax-advantaged accounts.
Blockchange’s turnkey asset management platform, BITRIA, enables financial professionals to offer crypto and other digital assets to their clients as another form of professionally managed investment.
The company bills its BITRIA platform as “the industry’s only end-to-end experience for RIAs, financial advisors or asset managers seeking scalable growth with digital asset investing strategies.”
Crypto in a Fast-Changing Global and Domestic Context
With the latest announcement from the People’s Republic of China banning crypto currencies in that part of the world, it’s clear that crypto asset management continues to be in a state of constant change.
Digital Wealth News recently connected with Dan Eyre, Co-Founder and CEO of Blockchange, to discuss the dynamic nature of cryptocurrency and digital assets, rising demand for digital assets within traditional investment portfolios and key trends that are redefining crypto asset management – and with it – the broader wealth management space.
DWN: For many financial advisors and traditional asset managers, crypto asset management can seem like the “wild west,” and Washington DC has started to take notice. How does your partnership with Equity Trust – and your BITRIA platform in general – address current and potential future regulatory concerns at the intersection of crypto and qualified retirement accounts?
Let’s start with acknowledging a hard truth: Crypto asset management seems like the “wild west” to many financial advisors and asset managers, because in many respects, it is. For every responsible and thoughtful provider out there, you have a multiple of vaporware vendors who are taking a cowboy approach, at best.
In contrast to crypto outfits that are trying to “fake it til they make it,” our platform has been purposefully built from day one to focus on helping financial advisors at RIAs and family offices, as well as asset managers.
We know these financial professionals must provide their clients who are interested in digital assets with the same level of customer service and experience they have come to expect in all other aspects of their wealth management.
I believe high-quality customer services and an easily understood experience are critical to establishing trust among customers. Providing solutions to financial advisors and asset managers to help them navigate dynamic regulatory environments while also giving them tools to deliver a best-in-class customer experience will go a long way to mitigate these false perceptions of this market.
As for future regulatory developments, nobody has a crystal ball that can predict exactly where the regulators will land.
Instead of trying to read tea leaves, the best thing financial advisors and asset managers can do is to look at crypto SMA and TAMP platforms that are taking a responsible and serious approach.
DWN: How big is the demand for crypto and digital asset custody within traditional tax-advantaged retirement accounts? Do you have any stats or information you could provide on whether typical retirement savers are gravitating toward digital assets?
Retirement assets totaled a staggering $35.4 trillion and accounted for 32 percent of all household financial assets in the United States at the end of March 2021, according to industry reports and government data.
Even if our partners hadn’t asked for these services, the market size alone supports this product offering.
With that said, there’s no question that we have seen significant demand, which will increase as the market matures and more financial professionals learn how to navigate these asset classes. Approximately 25 percent of the actively managed accounts opened on our platform are retirement accounts, and we expect that percentage to increase significantly with our new alliance with Equity Trust.
DWN: Anecdotally, it feels like many – if not the majority – of crypto asset management solutions providers are moving towards offering crypto ETFs or mutual funds, but Blockchange has instead focused on the single managed account (SMA) structure. Why?
An ETF is a great investment vehicle for investors who want passive exposure and the simplicity of not directly owning the underlying assets.
For investors who aren’t looking for flexibility, customization or tax benefits, and they just want a very basic and low cost experience, the ETF is a great vehicle.
But for high net worth and ultra-high net worth investors, the SMA structure is typically much more appealing for any asset class. This is because the SMA structure enables the delivery of highly customized portfolios. For example, our platform allows financial advisors and asset managers to deliver exposure for their clients to 40 different digital assets, combined with opportunities for tax loss harvesting.
We believe that SMAs will inevitably rule this asset class when it comes to investors who have more assets and financial complexity in their lives.