Wealthfront, a robo-advisor firm with over $25 billion assets under management, will now provide options for crypto exposure to its 450,000 clients
The firm has added two crypto asset trusts to its investment options — the Grayscale Bitcoin Trust (GBTC) and the Grayscale Ethereum Trust (ETHE).
According to Wealthfront’s website, investors will be able to allocate up to 10% of their portfolios to cryptocurrencies. The 10% cap is in place in order to help clients avoid creating overly risky portfolios.
Wealthfront says it offers cryptocurrency “as a diversification asset within a long-term investment strategy, not as a short-term investment or form of payment.”
The company does not offer clients the ability to own cryptos directly.
The addition of GBTC and ETHE to Wealthfront’s investment options will allow investors to increase their indirect exposure to crypto, previously only available to Wealthfront clients via the several ARK ETFs offered on its platform.
The ARK Next Generation Internet ETF (ARKW), for example, provides investors crypto exposure by holding exchanges such as Coinbase, big-time crypto investors like Tesla and Square, as well as GBTC itself.
According to Wealthfront, both GBTC and ETHE are unit investment trusts (UITs), which can have higher trading costs than ETFs because they are not traded on stock exchanges.
Both GBTC and ETHE hold crypto in cold storage; buying shares essentially allows investors to hold crypto in their portfolios, without the additional work and associated risks of holding crypto directly.
Although Wealthfront is the first robo-advisor to add options for crypto access, other financial institutions and investment service providers are slowly beginning to allow investors access to crypto.
Morgan Stanley became the first major bank to offer its wealth management clients access to Bitcoin earlier this year. Meanwhile, Goldman Sachs has begun trading Bitcoin futures.
Small 401(k) provider ForUsAll began allowing plan participants to invest up to 5% of their 401(k) contributions into cryptocurrencies in July.
For more news, information, and strategy, visit the Crypto Channel.
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