Robo-advisor Betterment has told investors using its instant cryptocurrency investing service that they have a month to convert those investments into ETFs.
The decision to close the two-year-old crypto investment platform, which New York-based Betterment announced via email to platform users on October 16, is seen as a sign of things to come that will likely devastate the crypto ETF space good ones will come.
“Now that ETFs are here, Betterment can throw all that out the window and replace the allocation with a much better offering,” said Ric Edelman, founder of the Digital Assets Council of Financial Professionals and etf.com advisory board member.
Citing the contrast between Bitcoin ETFs with fees as low as 12 basis points and the 1% charged to investors by the Betterment platform linked to Gemini, Edelman said, “It’s a win-win.”
“Customers save money, gain greater convenience and better portfolio rebalancing capabilities, and the company can eliminate a cumbersome and expensive internal operations function,” he said. “And those crypto brothers who want to maintain their position can do so by working directly with Gemini.”
Improvement nods towards crypto ETFs
Betterment declined to comment for this story, but a spokesperson did confirm the accuracy of a report from RiaBiz.com.
The story did not say that Betterment had recommended a particular crypto fund to customers.
Tyrone Ross, CEO of 401 Financial and Turnqey Labs, said Betterment’s decision to provide access to cryptocurrency models two years ago was innovative and important, but since the Securities and Exchange Commission approved Bitcoin and Ethereum ETFs this year, that view has changed. changed.
“I’m in favor of holding the underlying asset directly, but for most investors who aren’t crypto-savvy, investing through an ETF is the way to go,” said Ross, who added that he would never be an experienced crypto investor. would advise using a cryptocurrency. ETF.
“I despise everything about the crypto ETFs,” he said. “There’s the cost, the fact that there’s no direct ownership, it doesn’t solve many of the problems that advisors still have in the crypto space, and it’s just a cash grab by ETF issuers.”
That said, Ross expects more platforms to go the route of improvement by offering access to crypto ETF model portfolios, which he sees as a boon for those ETFs.
“I think you’ll see a lot of platforms that used companies like Gemini move to ETFs,” he said.
Edelman sees a similar evolution.
“Betterment is not only helping its clients and itself, it is showing all consultancies how easy this is to do,” he added. “There’s really no reason anymore for RIAs not to offer Bitcoin and Ethereum to their customers.”
Meanwhile, Chris King, founder of single account crypto platform Eaglebrook, sees a future where crypto ETFs and direct ownership in crypto become strategies that advisors focus on when customizing client portfolios.
“As crypto continues to evolve as standard portfolio allocations, we expect advisors will adopt crypto ETFs and crypto SMAs based on what best suits their clients’ specific needs,” he said.
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