Lukasz de Pourbaix, Lonsec chief investment officer

Product manufacturers are targeting advice channels to the retail market, citing a growing disparity between client interest a lack of adviser know-how in the burgeoning crypto-asset sector.

On the back of BetaShares releasing its Crypto Innovators ETF late last year (which subsequently became the first crypto-related product rated by researcher Lonsec), Brisbane-based Monochrome Asset Management partnered up with Lonsec for a recent webinar on crypto-asset investment.

Monochrome head of distribution Craig Hobart said advisers are getting plenty of queries about crypto, but not enough know how to answer them.

“We recently surveyed financial advisers and found that 77 per cent had received queries about crypto-assets investments from their clients yet only 11 per cent felt equipped to answer these queries,” Hobart said.

The webinar looked at some of the regulatory considerations of talking to advice clients about crypto-assets – a proposition fraught with worry for advisers keen to avoid regulator scrutiny. Crypto remains a largely unregulated sector as direct crypto investment aren’t considered financial products by ASIC.

Crypto investments are also highly speculative – as most advisers are sure to tell clients – and rarely sit on approved product lists.

Nevertheless, consumer demand for information on the sector is growing, which is fuelling the plans of product aggregators such as BetaShares and Monochrome.

Researchers, too, are taking note.

“Crypto-assets is increasingly becoming one of the most commonly raised topics we get from advisers,” said Lukasz de Pourbaix, Lonsec chief investment officer. “We understand that there is a great need for education around the asset class and how advisers can utilise them in their client’s portfolios.”

A slippery beast

In September last year the corporate regulator detailed some of the work it had been doing to better understand the “nature, size, and scale of the crypto-asset market” in Australia.

The task has been made more difficult by the lack of reliable information and global nature of the crypto value chain, ASIC explained.

“It is difficult to get a sense of the true nature and scale of the Australian crypto-asset market activity with existing available information,” a spokesperson stated. “To get a sense of what exposure Australians have to crypto-assets we would require direct information from entities that are generally based overseas and outside of ASIC’s jurisdiction, which is resource-intensive to obtain.”

“The crypto space is a big space, and it’s generally unregulated by ASIC,” chair Joe Longo said at a PJC hearing last year. “I think there’s quite a bit of policy work ahead of us to get a grip on this space.”

At the same hearing commissioner Danielle Press noted that while crypto remains largely out of ASIC’s purview, the new suite of ETFs based on crypto-assets is.

“We are interested in setting up some better practices in relation to expectations on market operators where they quote funds which are referenced back to crypto-assets,” Press said.

ASIC released guidance in October on how product producers can meet their regulatory requirements in relation to crypto-related products.

“This represents a huge move forward as investors will finally be able to access Bitcoin though a cost-effective, liquid investment vehicle,” VanEck said in a press release last November on ASIC’s announcement.

VanEck and BetaShares both announced they will offer bitcoin ETFs, with the latter also planning an ETF focused on the second largest  cryptocurrency, Ethereum.

One comment on “Crypto purveyors eye advice as knowledge delta grows”
  1. Avatar

    I would suggest advisers simply say no…and explain the difference between gambling / speculating and investing. If a client wishes to take a punt on investing in crypto then leave it with them. I appreciate there is some merits to the blockchain technology but it’s still the Wild West. And for any advisers suggesting my thinking is too oldschool – I recall also being told a similar thing about agri investments back in the day.….and we all know how that played out!

Join the discussion