On Wednesday (3 October 2018), shortly after Bitwise Asset Management, a leader in cryptocurrency index funds, had announced, via a press release, that legendary financial advisor and best-selling author Ric Edelman had invested in Bitwise and was going to serve as an advisor to the company, Edelman was interviewed by CNBC's “Fast Money” and asked about his views on Bitcoin.
Ric Edelman has pretty impressive credentials:
- the founder of Edelman Financial Services , which has been ranked the top independent financial advisor in the U.S. three times (including this year) by Barron's;
- a member of the Financial Advisor Hall of Fame;
- #1 New York Times Best-Selling author;
- host of the Ric Edelman Show, heard in the U.S. by more than 1 million listeners each week; and
- of the PBS Television show “The Truth About Money with Ric Edelman”.
During this interview, Edelman explained why is so bullish on Bitcoin, and yet he cannot advise his clients to buy Bitcoin until the U.S. Securities and Exchange Commission (SEC) approves a Bitcoin ETF.
First, CNBC reporter Bob Pisani reminded Edelman that earlier in the day Edelman had told him that all financial advisors needed to learn more about Bitcoin and should consider an allocation for their clients. Edelman was then asked why he was bullish on Bitcoin and if Edelman Financial Services was advising its clients to invest in Bitcoin right now.
“Well, I'am bullish on it because Bitcoin is now 10 years old, it's a $200 billion market in crypto total, Bitcoin is 40% of that… Clearly, it's here to stay. There's massive amounts of investment going into the blockchain, and cryptoassets specifically, and financial advisors, I am discovering, really don't know much about it, no more than their clients do, which means advisors can't effectively give advice to the clients that the clients need. Should I buy Bitcoin or other cryptoassets? So, how much? How do I do it? etc… And so my goal is to raise the bar of awareness, education, understanding, and knowledge so that advisors can be of greater value to their clients.”
Pisani then asked Edelman if he considered crypto a separate asset class (in the way that stocks, bonds, and commodities such as gold are).
Edelman replied that he didn’t know what the allocation would be, but that he did believe that cryptoassets are a valid asset class for investment purposes and a store of value just like precious metals. He pointed out, however, that the big problem is that there is currently “virtually no federal regulation”, and explained why this mattered:
“So, it's the wild west. There is no easy way for investors to do it. We're not encouraging our clients to buy it yet. Because of the wild west environment, there are a lot of fraud and scams. But the day will come, I am convinced, when the SEC… creates a Bitcoin ETF, and that will change everything.”
Edelman added that he was convinced that the industry would meet the SEC’s requirements and resolve the SEC’s concerns.
Finally, CNBC reporter and news anchor Melissa Lee asked Edelman why, if he was so bullish on Bitcoin, he was telling his clients to wait for a Bitcoin ETF, instead of telling them to go and buy Bitcoin on an exchange such as Coinbase.
“And that's the frustrating element of it. Because the SEC says that Bitcoin is not a security and because we are registered with the SEC, and we, at least in our practice, use only '40 Act products', products that are registered by the SEC under the Investment Company Act of 1940, we can't tell a client to go to Coinbase or invest in a private fund such as Bitwise that I'm a big fan of. We don't have that ability in our particular financial planning practice, and therefore it's a limitation for us, one of the reasons we're so frustrated. We'd love to see an ETF so that we would have the opportunity to be able to give our clients that investment advice.”
According to CryptoCompare, Bitcoin is currently trading at $6,582, up 1.57% in the past 24-hour period.
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