Blackrock’s chief investment officer of ETF and Index Investments discussed the cautious approach financial advisors take toward spot bitcoin exchange-traded funds (ETFs) due to price volatility and regulatory concerns. “Their job is really to construct portfolios and do the risk analysis and due diligence,” the executive stressed. “They’re doing that right now.”
Blackrock's Cohen Discusses Financial Advisors' Cautious Approach to Spot Bitcoin ETFs
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‘This Journey That We’re on Is Exactly the Right One and They’re Doing Their Jobs’
Samara Cohen, Blackrock’s chief investment officer of ETF and Index Investments, discussed the cautious but diligent approach financial advisors are taking toward spot bitcoin ETFs at Coinbase’s State of Crypto Summit last week. Blackrock’s spot bitcoin ETF, the Ishares Bitcoin Trust (IBIT), was among the 10 funds approved by the U.S. Securities and Exchange Commission (SEC) earlier this year.
Cohen acknowledged that while 80% of bitcoin ETF purchases come from self-directed investors, financial advisors are more cautious due to the cryptocurrency’s history of extreme price volatility and concerns over regulatory compliance and fraud. She stressed that advisors, as fiduciaries, must conduct thorough risk analysis and due diligence to construct portfolios that align with clients’ risk tolerance and liquidity needs. “I would call them wary … that’s their job … An investment advisor is a fiduciary to their clients,” Cohen said, elaborating:
This is an asset class that has had 90% price volatility at times in history, and their job is really to construct portfolios and do the risk analysis and due diligence. They’re doing that right now.
“This is a moment, in terms of really putting forward important data, risk analytics, the role bitcoin can play in a portfolio, what sort of allocation is appropriate given an investor’s risk tolerance, their liquidity needs,” Cohen opined, adding:
That’s what an advisor is supposed to do, so I think this journey that we’re on is exactly the right one and they’re doing their jobs.
The Blackrock executive also highlighted bitcoin ETFs as a bridge between crypto and traditional finance, providing a more accessible onramp for investors interested in bitcoin without managing risks across different ecosystems.
In December of last year, Ric Edelman, founder of Edelman Financial Services, explained that a survey revealed 77% of financial advisors are “waiting for the spot bitcoin ETF to become available so that they can provide this to their clients because every compliance department will say okay to that product because it’s just an ETF like other thematic ETFs.”
What do you think about the statements by Blackrock’s Samara Cohen? Let us know in the comments section below.
