Australia’s largest cryptocurrency brokerage service says financial advisors around the world are investing in Bitcoin, but can’t advise their clients to do the same.
Dr Prash, the CEO and Founder of Caleb and Brown, told Micky that dozens of advisors have used his service to buy hundreds of thousands of dollars worth of digital assets.
“These are wealth managers, who have their own personal cryptocurrency portfolios,” Dr Prash said.
“They see value in it … I’ve dealt with five or six of them personally already.”
Dr Prash says the majority of financial advisors contacting his staff are from overseas.
“The Australian market is still a bit behind in crypto terms,” he said.
“About 50 per cent of our clients are international – predominantly American – and the Americans are definitely a bit more ahead of the curve.”
Interestingly, while financial investors are taking the plunge into digital assets, regulation prevents them from telling their clients to do the same.
“They can direct their clients to us as a resource, but they can’t technically advise their clients (to buy) crypto. So it’s still very much a grey area. Their hands are tied.”
Will regulation change?
Dr Prash says financial advisors may be able to advise their clients to purchase digital assets once there is greater clarity from regulators.
“The fact that regulators have been ‘umming and ahhing’ and not giving us anything concrete has been an issue,” he said.
“As soon as that becomes a bit more concrete, I think we will see mainstream players start to enter the market. That’s where the money is.
“At the moment, they’re afraid. They’re scared because there’s no consistency in the messaging from the top down. Once we get some consistency, once crypto becomes a regulated financial instrument, which it isn’t at the moment, we will see the financial incumbents being able to invest in it.”
Mr Prash pointed out that there is $70 trillion being held in funds for high net worth individuals and the current cryptocurrency market cap of around $100 billion is “coffee money” to them.
“We just need a bit more of their coffee money and I we will see another spike,” he said.
When asked about the potential of a Bitcoin Exchange Traded Fund, Dr Prash laughed and said: “I feel like we’ve been talking about this forever!”
There has been delay after delay by the Securities Exchange Commission (SEC) as it decides whether to approve an application for an ETF by investment firm VanEck.
“The interesting thing is the number of times there have been delays and no cancellations,” Dr Prash said.
“The one true hope this gives me is that …. a lot of this is designed for those mainstream investors to get their ducks in a row before that next bull run gets started.”
(It’s not the first time somebody has drawn that conclusion, with Micky reporting one well known investor’s “Great Cryptcurrency Conspiracy” earlier this year.)
“There’s nothing to prove that, but if there’s anything we’ve learned from past financial history is that these guys are much smarter than we perhaps give them credit for,” Dr Prash said.
“They’re not ignoring the crypto market. They see a market that got away from them before they had a chance to capitalise on it and they – by way of having influence over regulation – have power over this market in ways we don’t know that they do.”
Dr Prash says Bitcoin futures exchange Bakkt is good for the cryptocurrency community.
“We forget that the rest of the world doesn’t understand the intricacies of the highly technical cryptocurrency field,” he said.
“But something like what Bakkt is offering is something akin to what the traditional financial investor understands. It gives them a way into the market.”
Will prices ever recover?
“Absolutely,” Dr Prash said.
“I think we’ll see a few more cycles like this. While the market cap is still small, we will continue to see that volatility. So I think the bounce back will be hard.
“There are some investors who’ve been holding out and holding out waiting out for a price point like this.”
Dr Prash said he can’t give a timeline, but expects the new bull run to be triggered by increased regulation.
What is Caleb and Brown?
Caleb and Brown was founded in 2016 to allow traders and investors to purchase large amounts of digital assets via a trusted entity.
It employs nine people and allows investors to speak directly to their own broker, who can help them with buying, storing and managing their cryptocurrencies.
Another key service offering is its in-house tax consultancy, which has been particularly useful for investors throughout the bear market.
“It’s a good time to capitalise on registering a capital loss for tax purposes, and then buy right back in with a more tax efficient structure,” Mr Prash said.
“We have an in-house tax team that sets people up with different structures so that when you do choose to liquidate, you’re already holding it in a manner that you minimise your taxable gains.”
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