Wealthfront customers in the USA 🇺🇸 can now expose up to 10% of their portfolios to crypto by investing in Bitcoin and Ethereum trusts (which hold the actual crypto).
The celebratory headline image on Wealthfront’s blog post
Buying cryptocurrency can feel intimidating — it takes time and effort to research all of the options, set up a wallet, and monitor an additional account. That’s why we’ve made it easy to get exposure to Bitcoin and Ethereum right in your Wealthfront portfolio, no wallets required. Instead of buying coins yourself, you can invest in GBTC and ETHE.
I think Wealthfront finally decided that it needed to offer crypto to be competitive in the wealth management space. But while it has made it convenient, offering well-established crypto trusts instead of direct access to a crypto exchange, it has also built in caution through the 10% allocation cap.
In any case, this is a big move – Wealthfront has become a mainstream money manager with nearly half a million customers with assets of about USD 25 billion. Its main rival Betterment, which manages about USD 30 billion, has also said it is seriously planning to add crypto. On the brokerages Charles Schwab and Fidelity, customers can buy into the same Bitcoin and Ethereum trusts from Grayscale that Wealthfront offers.
Add to that crypto in PayPal, Venmo, Square and Robinhood, and you can see how if you’re an investor in the US, it’s super easy to get direct exposure to cryptocurrency without actually buying crypto tokens.
As we’ve examined several times on this newsletter, the convenience of buying and selling crypto via these apps comes with some serious downsides. Most seriously that you don’t own these tokens yourself – because another institution holds them on your behalf – defeating the whole point of ‘you are your own bank’.
In the end, though, this rapid mainstream-isation of cryptocurrency makes it less and less likely that regulators will ban or severely hobble its ownership. We will, though, examine one serious threat soon.
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