Blackrock’s head of ETF and Index Investments discussed the cautious approach financial advisors are taking towards spot bitcoin exchange-traded funds (ETFs) due to price volatility and regulatory concerns. The executive emphasized that advisors are focused on constructing portfolios, conducting risk analysis, and due diligence, stating that they are currently fulfilling these responsibilities.
Samara Cohen, Blackrock’s chief investment officer of ETF and Index Investments, addressed the careful yet diligent stance financial advisors are adopting towards spot bitcoin ETFs at Coinbase’s State of Crypto Summit recently. The Ishares Bitcoin Trust (IBIT), Blackrock’s spot bitcoin ETF, was one of the 10 funds approved by the U.S. Securities and Exchange Commission (SEC) earlier in the year.
Cohen recognized that while 80% of bitcoin ETF purchases are made by self-directed investors, financial advisors are proceeding cautiously due to the cryptocurrency’s history of significant price fluctuations and concerns regarding regulatory compliance and fraud. She emphasized that advisors must conduct thorough risk analysis and due diligence to create portfolios that align with clients’ risk tolerance and liquidity requirements. Cohen described advisors as “wary” due to their fiduciary duty and the necessity for risk assessment and due diligence in portfolio construction.
The executive noted that bitcoin ETFs act as a link between cryptocurrency and traditional finance, providing a more accessible entry point for investors interested in bitcoin while managing risks between different financial ecosystems.
In a survey conducted in December of last year, Ric Edelman, founder of Edelman Financial Services, revealed that 77% of financial advisors are eagerly awaiting the availability of spot bitcoin ETFs to offer to their clients, as compliance departments are likely to approve this product as they would other thematic ETFs.
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