HashKey Launches Wealth Management Platform for Institutional Investors

Hong Kong-based digital asset firm, HashKey Group, has launched a new wealth management platform aimed at professional and institutional investors. The move comes in response to a growing demand from investors seeking access to virtual assets. The platform will allow the group to offer solutions to help tap into the “growing opportunities of virtual assets.”

HashKey’s venture capital arm, HashKey Capital, is the first to benefit from the new platform. It will manage portfolios that only contain virtual assets. The company was granted a “Type 9 asset management license” by Hong Kong’s Securities and Futures Commission, which likely paved the way for its latest offering.

The launch of the wealth management platform comes after HashKey closed a $500 million investment round for a fund that aims to push for mass adoption of blockchain and crypto technologies. The move highlights the company’s commitment to driving the adoption of digital assets.

According to a 2022 study from consultancy firm Boston Consulting Group, only 0.3% of individual wealth is invested in crypto, compared to the 25% invested in equities. However, HashKey believes there is “potential robust demand for virtual assets in the future.”

In addition to launching the new platform, HashKey is expanding its over-the-counter trading service. The company plans to increase the number of tokens in its spot market and increase its liquidity coverage to 24/7. The move is a response to recent challenges in the crypto market, which have highlighted the need for deep and reliable liquidity.

HashKey’s move into the wealth management space comes as institutional investors continue to explore the potential of digital assets. Many are looking for ways to gain exposure to the emerging asset class, which has been one of the best-performing asset classes in recent years.

Overall, HashKey’s launch of a wealth management platform for professional and institutional investors is a significant step forward for the digital asset industry. The move highlights the growing demand for virtual assets and the increasing interest from institutional investors seeking exposure to the emerging asset class. With its new platform and expanded over-the-counter trading service, HashKey is well-positioned to capitalize on the growing interest in digital assets.


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Cathie Wood Buys More Robinhood And Tesla, Tells Investors To Take ‘Advantage’ Of Volatility


Widely-followed stock picker Cathie Wood of Ark Invest, looking to bounce back as her funds continue to underperform, is using recent market volatility to buy the dip on big growth names like Tesla and Robinhood—both of which have seen shares struggle amid the wider sell-off in January.

Key Facts

The founder and CEO of Ark Invest purchased a total of 2.58 million shares of popular stock trading app Robinhood after the stock plunged to a record low of less than $10 per share on Friday following a dismal quarterly earnings report.

Wood purchased more than 2 million shares for her $12 billion flagship ARK Innovation ETF, with a total stake in Robinhood worth nearly $200 million, according to Morningstar data.

Robinhood is down nearly 70% since going public last year but Wood has continued to buy shares of the company since late October—when the stock plunged below its IPO price of $38 per share.

Another of Wood’s big trades in recent days: Adding to her position in Tesla for the first time since June 2021, buying roughly 55,000 shares—worth nearly $50 million—of the electric vehicle maker.

Tesla’s stock has fallen over 20% so far this year amid a wider selloff in growth and tech stocks, but Wood’s latest purchase may be a sign that she thinks shares are down to a more reasonably priced level.

Elon Musk’s electric vehicle outfit is Wood’s biggest holding in her flagship fund, making up about 8% of the ARK Innovation ETF—a position worth over $900 million, according to Morningstar data.

Surprising Fact:

The Ark Invest founder also sold 70,000 shares worth of Spotify on Friday, amid the latest controversy surrounding the company. Several artists have boycotted the music streaming platform in light of false Covid-19 claims spread on Joe Rogan’s podcast. Wood still holds a sizable stake in Spotify—it is one of her flagship fund’s top ten holdings—worth almost $500 million, according to Morningstar. 

Crucial Quote:

Amid the wider sell-off in tech stocks, Wood told investors last week that “innovation is on sale,” though she remained unswayed by the recent market swings. “We use volatility to our advantage,” she said. “We concentrate towards our highest conviction names and that tends to work very well as we go through these corrections.”

Key Background:

After rising to fame in 2020, with her flagship fund surging nearly 150%, Wood’s performance has since gone downhill. The ARK Innovation fund fell 24% in 2021—losing over a fifth of its value–while the S&P 500 was up 27%. So far this year, the fund is down another 20%. With the Federal Reserve tightening its monetary policy and preparing to raise interest rates, investors have largely dumped riskier growth stocks, with shares of tech companies particularly hard-hit. The Nasdaq Composite index subsequently fell into correction territory in January, more than 10% below its record highs last November.

Further Reading:

Robinhood Shares Plunge Amid Gloomy Revenue Outlook Just One Year After Meme Stock Mania (Forbes)

Cathie Wood Doubles Down On Growth Stocks After Fund Loses A Fifth Of Its Value In 2021 (Forbes)

Stocks Just Had Their Worst Month Since March 2020: January’s Wild Ride In 8 Numbers (Forbes)


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The Income Taxation Of Creators, Investors, Dealers And Collectors Of NFTs

The creative process of individuals, and the medium through which a Creator works, is constantly expanding, including digital assets such as Non-fungible Tokens. NFTs that are created, bought, sold or exchanged are considered property by the IRS, and so these are taxed like art buying, selling or exchanging art.

For the Creator of an NFT   

           For the Creator, the minting of the NFT is not a taxable event, but, where creating the NFT is due to their personal effort (or the effort of someone who is creating the NFT for them) or the NFT is part of the Creator’s trade or business, then the gain from the sale or exchange of the NFT is taxable as ordinary income.

A Creator can receive a percentage of the subsequent sale proceeds. When the Creator receives such a payment on a subsequent sale, that payment is also considered to be ordinary income, much like payments of royalties on copyrights, patents and other intellectual properties. Since those payments are perpetual, those rights cannot be depreciated.

Beyond the Creator: Investor, Hobbyist, Business Collector and Dealer

Once the NFT leaves the hands of the Creator, the owner is categorized as  one of four types of owners:  the Investor, Hobbyist, Business Collector or Dealer, each of which have different tax considerations. Which category a taxpayer falls into would depend on the facts and circumstances of that taxpayer’s case.

Following is a brief introduction to the four categories.

The Investor


An Investor is a person who buys, sells and collects NFTs solely as an investment with the hope the asset will appreciate to enable sale at a profit. For an Investor, generally the NFT investment when sold is taxable as a capital gain unless it falls outside the definition of capital asset. IRC § 1221 defines capital asset to include all assets except inventory for the taxpayer’s trade or business.

   An Investor can be classified as a Dealer or a Hobbyist instead of an Investor based on the facts and circumstances in their case. Sometimes Investors want to be classified as Dealers when they have losses to be able to deduct the loss as ordinary income rather than as a capital loss.

The Hobbyist

An owner of NFTs is presumed to be a Hobbyist. A Hobbyist is a collector who buys NFTs without considering whether it will ever be a profitable investment. Because of the tax disadvantage of being a Hobbyist, the Hobbyist often tries to be classified as an Investor.

The Business Collector

A Business Collector does not buy the NFT for resale but rather for a business purpose such as office display or decorative logo used in the ordinary course of trade or business. Because the useful life of an NFT is not determinable,  it is generally not subject to depreciation (unlike copyrights and other IP interests). Facts and circumstances need to be reviewed in each individual case to determine the categorization of the activity.

The Dealer

The Dealer is one who buys and sells NFTs as a trade or business. NFT Dealers are taxed in the same way as any other retail operation. As such all income including income from the sale of NFT is taxed as ordinary income. Expenses, if ordinary and necessary, are deductible. Dealers sometimes want to be classified as Investors because of the favorable capital gains rates versus being taxed on said gains as ordinary income. Additionally, Dealers can wear the hat of Investor in NFTs as well as Dealer in NFTs keeping the two as separate activities.

Installment Sales

Installment sales are where you sell a highly appreciated asset in return for an installment agreement. In an installment sale, you only pay tax on the gains and the interest as they are paid out to you.  

Trades involving NFTs

   Trades are a common income issue. Trades occur when an owner trades NFTs for other NFTs or Cryptocurrencies. Trades are treated in one of three ways:

  1. Recorded on the books as non-taxable. The basis of the new item received is the same as the item given up, plus any  cash or property received to make the values equal (this amount to equalize the value is sometimes called “the boot”). Any such boot received would be reported as income.
  2. Recorded as a taxable event. The basis of the new item is its fair market value, or cost.
  3. A hybrid method using parts of both methods.

Despite clear law on the recognition of income from the exchange of inventory, trades are still often treated as non-taxable events, with the industry claiming they have always done it this way and/or that fair market value is hard to determine. Irrespective, an adjustment to a taxable event is required.

Charitable Contributions of NFTs

The computation of the amount of a charitable contribution, limitations that affect the amount of the allowable deduction and other aspects of charitable contribution are beyond the scope of this brief introduction. However, there are issues involving charitable contributions of NFT that the private taxable collector should be aware of. In many cases, the owner of an NFT partners with a charity to sell the NFT at auction, with the proceeds going to the charity, and using the net sale price as the value for charitable purposes.


There is currently relatively little case law specifically on the income taxation of the sale, exchange or donation of NFTs. The Treasury treats cryptocurrency as cash for reporting purposes, but the IRS treats transactions involving cryptocurrency, including NFTs, are to be treated as property. Until the rules are clearer, following the rules on the income taxation of art is the best insurance against possible penalties and interest.


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Gemini Enters Wealth Management After Acquiring BITRIA

Gemini, a $7.1 billion cryptocurrency exchange, announced Thursday that it has acquired five-year-old San Francisco-based digital asset portfolio management firm BITRIA to provide a digital asset ecosystem for wealth management institutional asset managers.

Gemini said that upon completion of the acquisition, it will seek to integrate BITRIA’s digital asset separate management account (SMA) and digital turnkey asset management platform (DTAMP) into Gemini’s custody and exchange capabilities, offering wealth management advisors SMA construction and maintenance; Portfolio rebalancing; Tax-loss harvesting; Fee collection and billing; Account planning; Data connectivity.

Dave Abner, Head of Global Business Development said that:

“The BITRIA acquisition positions Gemini as the first end-to-end technology platform empowering wealth and asset managers to meet rising demand among their clients for accessing and managing a full range of crypto investments.”

A recent survey from the Pew Research Center has drawn an insight into the popularity of emerging digital currencies amongst Americans. At least 16% of Americans have invested in Crypto.

Regarding the wealth management field, Abner said that there are very few choices for wealthy investors in the cryptocurrency field. “Many financial advisors would only have access to one or two tokens through closed-end funds and spot crypto ETFs,” he mentioned.

So the acquisition is designed to give Gemini access to cryptocurrencies as it moves into the wealth management space to stalk wealthy investors.

In November of last year, American cryptocurrency exchange Gemini raised $400 million through growth equity financing, led by Morgan Creek Digital.

Meanwhile, Coinbase has planned to launch a cryptocurrency derivatives service for retail and institutional clients, announcing the acquisition of derivatives exchange FairX.

According to cryptocurrency insiders, mergers will surge this year as emerging digital asset giants such as Gemini and Coinbase both gain capabilities and expand their product offerings by acquiring promising high-tech companies.

Image source: Shutterstock


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Tax Reporting For Crypto Is About To Get A Lot Easier, Faster And Cheaper

The Internal Revenue Service announced yesterday that the 2022 filing season will open January 24, and tax returns for individual U.S. taxpayers are due on April 18. Tax season is especially cumbersome for those who buy, sell, trade or invest in digital assets such as cryptocurrency and Non-Fungible Tokens, or NFTs. Unlike your average brokerage account at Edward Jones, until now, most cryptocurrency exchanges haven’t provide a 1099 or other information reporting form that accurately reports gains and losses from transactions entered into in a given year. Calculating basis, gains, and losses was incredibly cumbersome and expensive for investors in digital assets.

Today, TaxBit announced a new network that will provide free, unlimited federal information returns needed for cryptocurrency and NFT investors for 2021 for transactions that were conducted on exchanges that belong to the TaxBit Network.

Tax Reporting for Digital Assets Like Crypto and NFTs – 101

In general, cryptocurrency and NFTs are taxed like property. You can read more about how to properly report these assets here. But investors in cryptocurrency and NFTs do not currently get the kind of information reporting forms that holders of publicly traded securities receive. The lack of routine and uniform information reporting makes it extremely costly and time consuming for taxpayers to prepare their federal income tax returns and report virtual currency or digital asset transactions.

Say you bought 3 shares of Microsoft MSFT stock back in January of 2018 for $89.00 a share. Then on December 10, 2021, you sold those three shares for $342 a share. You will receive a 1099 showing that you had basis of $267 in the three shares, a gain of $253 per share, and a total gain of $759. Because cryptocurrency is treated as property, but is not eligible for 1031 Like-Kind Exchange Treatment, exchanging one type of cryptocurrency for another is a taxable transaction. And keeping track of information required to accurately calculate and report the tax consequence of such transactions has historically been extremely cumbersome and difficult, both from a labor intensive and cost point of view.

With the passage of the Infrastructure Investment and Jobs Act (Public Law 117-58), cryptocurrency will be defined as a security and subject to increased information reporting requirements by “brokers,” which will now include “[a]ny person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.” Put differently, once the new law takes effect in December of 2023, all digital asset brokers, exchanges, or sellers will be required to provide information reporting forms for digital asset transactions, including cryptocurrency and NFTs.


A New Approach – TaxBit Network

TaxBit’s network will revolutionize tax return preparation for digital asset investors and users now, and just in time for 2021 filing season. It will offer every user of a certified TaxBit Network company the option to receive a free 2021 tax information form, including IRS Form 8949, which is required to report property exchanges, sales, and dispositions, as well as forms that will provide an income report.

According to TaxBit, “In tandem with the launch of TaxBit Network, many participating platforms will be incorporating a one-click, free TaxBit sign up within their native applications to further simplify access to 2021 tax forms and year-round access to TaxBit’s industry-leading software.”

TaxBit CEO Austin Woodward, who is a Certified Public Accountant, created TaxBit together with his brother Justin Woodward, who is a tax attorney. Austin Woodward describes the TaxBit Network as similar to a health insurance network that will provide services free of charge to the end-users (customers) who use the in-network providers. In fact, the TaxBit “network” will operate much like a health insurance network. In-network exchanges will now include a feature that allows clients to press a button and produce the tax information reporting form associated with all of the transactions in that account, free of charge. TaxBit’s computation and tax form preparation services can still be used for years prior to 2021 and for out-of-network exchanges or private wallets, but taxpayers will have to pay a fee for those services. The TaxBit Network includes well-known cryptocurrency exchanges such as Coinbase and is growing every day.

“With the recent passing of the cryptocurrency tax provision in the Infrastructure Bill, proactively providing our users with the tax reporting and forms they need is an important step in our commitment to safety and compliance. Binance.US is excited to make the tax reporting process simple and free to our users through the TaxBit Network,” Brian Shroder, CEO of Binance.US, said in a statement.

“TaxBit solves a critical challenge for our clients, cryptocurrency investors and digital asset companies, through increasing consumer confidence, which is a win for the industry at all levels, said Thomas Kane, CEO of Kane Capital Group. “Cryptocurrency investors of all magnitudes will be provided an element of standardization for the tax reporting process where there is not a clear precedent. These types of services are essential to retail and institutional investors as U.S. lawmakers determine how to best implement a regulatory framework for this industry.”

Digital Asset Tax Compliance Issue

The IRS has made no secret that it is aggressively pursuing taxpayers who engaged in cryptocurrency transactions and failed to accurately report and pay tax on those transactions. Moreover, the IRS has confirmed that it is not considering a global voluntary disclosure program specifically designed for taxpayers who engaged in digital asset transactions but failed to disclose them.

“We expect compliance with the rules to properly report activities involving any property or currency to include virtual currency. While the technology can be complex, the taxation is much simpler: spending or disposing of virtual currency is generally a taxable event. At the end of the day, when you sell or trade something for more than you paid for it, you can expect to trigger a tax,” according to the IRS. Indeed, not only is the technology complex, but so too is maintaining the relevant information needed to calculate and report federal income taxes based on those complex transactions. The unlimited wallet and unlimited transaction product that TaxBit is offering for free will certainly make it easier for taxpayers to correctly prepare and file their taxes for 2021 and 2022, ahead of the new reporting required by the Infrastructure Bill.

What about Private Wallets? Yes, the IRS can see you.

As a tax controversy attorney, I often hear from people who think that crypto held in a private wallet is just that – private. And these same people think that they can disclose crypto held on a public exchange, such as Coinbase, without having to disclose the existence of a private wallet. This is a terrible idea. First, the simple act of disclosing part of the story is far worse from a criminal tax perspective then just about any other course of action possible. The taxpayer demonstrates an understanding of what is required, but only does some of what is required. This is textbook criminal tax evasion.

Second, just because something is in a private wallet does not mean that the IRS cannot see it. Indeed, according to the IRS, “[i]t’s certainly feasible to track virtual currency as it enters an address, even when the address is held in a private wallet. Then, when the wallet owner `spends’ virtual currency by engaging in a transaction, the tracing process can resume and follow the progression of transactions, either backward or forward along the blockchain, to obtain both the history of transactions leading to the private wallet and the disposition of virtual currency when it leaves the wallet. The phrase we live by at the IRS, ‘Follow the money,’ works as well in the virtual currency world as it does in the fiat one. It’s just that in IRS parlance, we now think of ‘Following the property,’ as virtual currency is defined by IRS.”

When asked about whether the IRS can trace funds held in a private wallet, the IRS responded affirmatively, “IRS has deployed various software tools to agents working cases involving virtual currency transactions. We are able to trace transactions and taxpayers on the blockchain as well as through various data sources we have, which we can then use in evaluating whether a particular taxpayer is tax compliant. It’s always important to keep in mind that any transaction has two sides, not just one. There is always both a sender and a receiver. In addition, there is always a transmission of the value between the sender and receiver and this is where many transactions become visible on the blockchain. When the blockchain, which is by definition, a `public, distributed ledger’ is used, the transaction trail is visible and can be traced.”

TaxBit’s new Network won’t allow individuals to generate free reports that go back to years prior to 2021. But for anyone who engaged in cryptocurrency transactions without reporting them in past years, now is the time to consider paying for services like what TaxBit is offering to get ready to come into compliance. Just be sure to do so with a qualified tax lawyer who can advise on the best way to come in without getting criminally prosecuted.

MORE FROM FORBESIRS Announces 2022 Tax Filing Start Date


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CEO of $300 Billion Swiss Bank says Wealthy Clients Have Crypto Appetite

Zeno Staub, CEO of pro-crypto Swiss banking giant Vontobel, has revealed that the firm’s wealthy clients are showing an appetite for cryptocurrency exposure. Major banks in the United States, Europe, and Asia are beginning to offer structured Bitcoin (BTC) and virtual currency-related investment products to their wealth management clientele.

Wealthy Clients Keen on Adding Crypto to Investment Portfolios

In an interview with Bloomberg on Tuesday (July 27, 2021), Staub stated that Vontobel’s rich clients are interested in crypto investment even as the bank posted a record-breaking first half of the year. According to its H1 2021 financials published on Tuesday, Vontobel saw its assets under management grow by 11% to reach an all-time high valuation of almost $300 billion.

With crypto as a part of the bank’s investment products, it stands to reasons that virtual currency instruments contributed to Vontobel’s success in the first half of the year. Detailing the prevailing interest for cryptocurrency exposure among its wealthy clients, Staub remarked:

“Clients have an interest in digital assets, clients have an interest in cryptocurrencies […] What we offer to our clients is that we’ve wrapped some cryptocurrencies in a secure, convenient, [and] easy to handle way and clients appreciate that and allocate part of their wealth to that.”

As previously reported by BTCManager, Vontobel’s Bitcoin certificates are one of the better-known regulated crypto investment products on offer by recognized financial institutions in the market.

However, Staub stated that Vontobel is more interested in blockchain technology, adding:

“We believe that the underline technology is actually more important than certain types of applications.”

According to Staub, the bank sees blockchain as the only viable technology available today to ensure robust securitization without the need for third-party counterparty entities. Commenting on the future potential of the novel tech, the Vontobel chief remarked:

“We will see major changes coming out of that going forward.”

Big Banks Onboarding Institutional Investors

Vontobel is one of a growing list of banks and financial institutions with regulated crypto investment products on offer for rich clients. In July, Wall Street giant JPMorgan announced plans to float a cryptocurrency investment product for its affluent clients.

Apart from creating crypto investment products, banks and financial institutions are also deploying cryptocurrency custody solutions, acting as trusted custodial providers for other institutional-grade crypto investment vehicles.

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JPMorgan Chase Expands Crypto Trading Services to All Clients

JPMorgan Chase Bank has announced that it now allows all of its wealth management clients to access crypto funds.

In an internal memo written last week on July 19, the bank informed its advisers to buy and sell orders from its wealth management clients for crypto products.

Advisers in JPMorgan’s wealth management division can now accept orders to buy and sell up to five cryptocurrency products, including Grayscale’s Bitcoin Trust, Ethereum Trust, Bitcoin Cash Trust, Ethereum Classic Products, and Osprey Funds.

The new crypto offering applies to all JPMorgan clients looking for investment advice, including self-directed clients who use the Chase commission-free trading app, ultra-rich clients served by the company’s private bank, and affluent mass clients whose assets are managed JPMorgan advisers.

JPMorgan’s move makes it the first major bank to expand cryptocurrency trading access beyond just ultra-wealthy clients.

Advisers are not allowed to recommend cryptocurrency products to clients but only buy and sell on behalf of clients’ requests (clients must ask to make cryptocurrency trades).

Mary Callahan Erdoes, JPMorgan Asset & Wealth Management’s CEO, discussed the development. She admitted that many of its assets and wealth management clients think that crypto is an asset class and wants to invest.  

“A lot of our clients say that’s an asset class, and I want to invest. Our job is to help them to put their money where they want to invest,” Erdoes said.  

Meanwhile, senior management from JP Morgan revealed that the company plans to hire more than 500 wealth management advisors in five to seven years to serve their premium clients, according to coverage from Reuters Thursday.

Diversified Investment

On April 28, JPMorgan announced that it was looking to dip its toes into the crypto water and launch a Bitcoin service to clients. During that time, the bank went ahead and only allowed its private wealth clients to invest in an actively managed Bitcoin fund, with NYDIG crypto company offering custody services.

Meanwhile, JPMorgan’s interest in the crypto space comes as a great surprise, given that CEO Jamie Dimon has consistently shown that Bitcoin is not his cup of tea. In May, Dimon returned to the limelight when he advised people to “stay away” from crypto assets. He, however, stated: “That does not mean the clients don’t want it … I don’t tell people how to spend their money, regardless of how I might personally feel about something.”

The current efforts by JPMorgan to expand access to cryptocurrency products for all of its clients comes at a time when interest among retail investors in the crypto market is on the increase, particularly after Bitcoin hit $65,654 in April. Despite the market deflating its price with Bitcoin currently trading at $32,263, retail demand to gain exposure to the volatile asset class as a portfolio diversifier or store of value remains strong.

Image source: Shutterstock


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Citi Bank Launches “Digital Asset Group” for Developing Crypto Products

Citi group officially announced a “Digital Asset Group” launch in its wealth management department on Thursday.

This new division will be led by Alex Kriete and Greg Girasole of the Citi Global Wealth Investment (CGWI) division. The establishment of the Digital Assets Group will make Citi the latest bank to set foot in the field of encrypted wealth management.

According to the memorandum signed by Iain Armitage, head of Citi’s global capital markets, and global head of Citi’s investment management Rob JasminskiKriete and Girasole‘s promotion will be responsible for leading the new department to provide digital assets such as cryptocurrencies, non-fungible tokens (NFT), stablecoins and central bank digital currencies (CBDC) the best market-leading partner for various assets.

Citigroup wrote in a signed memorandum:

“Given the exciting new developments we are seeing around cryptocurrencies, tokenization, and other advances powered by blockchain technology, we are pleased to announce the formation of the Digital Assets Group.”

The group said it would commit to the development of cryptocurrency and blockchain fields. In addition to Citibank, other well-known financial institutions, such as  Morgan Stanley and Goldman Sachs, have also launched their internal plans to scrambling for a piece of the action in the cryptocurrency market for their wealthy wealth management clients.

Earlier in May, Citi Group is planning to enter the crypto space. The multinational investment bank appears to be in the early stages as it has not decided on specific crypto services it would offer.

However, the bank is engaging in discussions regarding the roll-out of trading, financing, and custody of all crypto services.

Image source: Shutterstock


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Is Coinbase’s IPO A Wake Up Call To Crypto-Luddite Brokers?

Last week, when Coinbase, America’s most popular bitcoin brokerage, went public it ended the day with a 30% gain, good for an impressive $86 billion market cap. That’s more than double the market cap of venerable BNY Mellon, whose roots go back to 1784.  In some ways the stock offering was a coming out party for bitcoin and cryptocurrency investing, which has long been dismissed by many on Wall Street as fool’s gold.

But Coinbase’s IPO— and bitcoin’s 700% climb in the last 12 months— has finally captured the attention of the $7 trillion-plus wirehouse brokerage industry, which until recently has restricted clients from investing in digital assets. Well-heeled clients are now demanding bitcoin as an investable alternative asset and wealth managers are loathe to be typecast as the luddites of the blockchain age.  

Many of the largest firms on Wall Street have already made pronouncements both publicly and privately about their intentions to start working in the digital asset space. Despite that, none of the major firms, including Morgan Stanley, UBS, Goldman Sachs and BNY Mellon would offer any advisors or executives to speak to Forbes on the record about their approach and intentions with regard to cryptocurrencies.

Last month it was widely reported that Morgan Stanley MS told financial advisors in an internal memo that it would be launching access to three Bitcoin funds. The wirehouse would only allow it for wealthier clients with aggressive risk tolerances and at least $2 million of assets in house.

BNY Mellon first made news on the virtual currency front in February, announcing that it had formed a new team to develop a platform to custody and store digital assets before investing in start-up Fireblocks as a potential partner in that pursuit.


Goldman Sachs GS recently named Mary Rich global head of digital assets within its private wealth division and is looking to offer clients access in the second quarter of this year. That move was prompted by clients going on their own and investing in the new technological advancement without their advisors, according to Bloomberg.

Citi Private Bank CIO David Bailin said that Bitcoin can be part of the “opportunistic side” of portfolios in an interview with Yahoo Finance, adding that the asset will do well based on its outsize level of interest but that he has some fundamental fears.

JPMorgan JPM sent out a report on the risks and opportunities of crypto investment to its private banking clients, who are required to have a minimum balance of $10 million, in March of this year.

Despite the explosion of interest, some investment firms are still wary about getting involved. HSBC is reportedly barring clients from investing in the Coinbase IPO as it maintains a hardline policy of avoiding digital assets. This steadfast avoidance is perhaps owed to fears around anti-money laundering and know-your-customer compliance issues. While Coinbase has stocked up on staff to shore up their practices on that front, HSBC is still reeling from a $1.9 billion fine and ensuing reputational damage from its own 2019 money laundering scandal settlement.

“Clients started asking us about cryptocurrency a couple of years ago, we gradually built up our knowledge base and looked for ways that we could recommend ideas to them to access the space,” says Ted Katramados, director and associate portfolio manager at TAG Associates, a New York-based RIA that manages $8.6 billion. “Where we’ve come out is educating them and recommending actionable ideas.”

Katramados says that his firm is in the “stay rich business, not the get rich business” which has colored their approach to the volatility of cryptocurrency in the past, with the sector far more associated with quick windfalls. However, with growing client interest, the entire financial services industry has been forced to open its mind to how to approach the ascendant world of digital assets.

While there are several strategies for high net worth individuals to access the cryptocurrency market, TAG Associates doesn’t currently recommend for clients to go long on the investment by putting money into specific coins through platforms like recently IPO’d Coinbase or other custodians and brokerages that offer access. The unclear price future makes it difficult for TAG and other advisors to recommend it.

“Frankly, if you ask me where the price of Bitcoin will be a year from now, it could be double, it could be half, probably with equal probability and that’s simply not a game that we’re willing to recommend to our clients,” Katramados adds. “If they want to do it on their own, that’s one thing, but that’s not something that we’d recommend.”

In lieu of that strategy, Katramados and TAG have looked to a “second order or second derivative way to play the crypto space.” That has taken the form of investing in hedge fund strategies around arbitrage. Several of the funds they have chosen along those lines look to profit off of the price difference between the tokens and Bitcoin trusts and futures.

“What we like about this strategy is that the potential still exists to make pretty high returns, yet you don’t have to take the directional risk,” he says. The reason these opportunities exist, according to Katramados, is that this nascent market with lots of retail trading has greater inefficiency than in other more established sectors with more institutional presence. Additionally, the outsize volatility of cryptocurrencies creates more opportunities in arbitrage or similar value strategies.

“When you add all that up you have an opportunity to still make very good returns, with a fraction of the risks that you’d be taking if you just made a directional bet on the price of Bitcoin, for example,” he adds.

Katramados expects to see further adoption and embrace of cryptocurrency across wealth management and has seen that slowly emerge over the past year and a half.

The IPO of Coinbase last week marked a major milestone for the entire digital asset space, according to Katramados, who describes it as “a watershed moment that you can point to, it certainly gives it more credibility for sure. It makes people stand up and take notice and take the space more seriously.”


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Gary Gensler Confirmed As New SEC Chair As Agency Tackles GameStop Saga, ESG Boom And Cryptocurrency

Gary Gensler, the recently approved chair of the Securities and Exchange Commission, will have his hands full as he looks to tackle the key issues of the moment including ESG investing, cryptocurrency, order routing and a fiduciary standard for brokers.

Gensler, who previously served as chair of the Commodity Futures Trading Commission, was approved by the United States Senate on April 14 after a delay . Industry sources say he brings a reputation as an “extremely active regulator” having made it clear in his nomination hearing before the Senate Banking Committee in early March that additional disclosure requirements will be key to his approach to these pressing issues.

Kirkland & Ellis partner Norm Champ says that increased disclosure around ESG investing should be expected following the recent announcement of a Climate and ESG task force at the SEC led by Acting Deputy Director of Enforcement, Kelly Gibson. Champ expects more onerous requirements for companies to disclose how they are handling climate risk as well as diversity. While ESG investing has exploded over the past decade, there has been scrutiny over a lack of oversight of late as its popularity continues to swell.

Gensler will bring experience from his career in academia to bear, coming to the SEC from the Massachusetts Institute of Technology Sloan School of Management where he was a professor of the practice of global economics and management. He also served as co-director of a fintech group at the school as well as a senior advisor to the MIT Media Lab Digital Currency Initiative in between his two stints running financial regulators.

The financial services industry is still looking for a cohesive approach on the categorization of digital assets, which depending on the regulatory body has been considered a commodity, property, currency and a security.


While issues like ESG and cryptocurrency have been building in prominence and were certain to be top of mind for the next chair, the GameStop stock rally earlier this year fueled by Reddit thrusts issues around online brokerages and order flow onto Gensler’s docket.

He will also be the latest head of the SEC to tackle the longstanding search for a clear fiduciary standard for financial advisors and broker-dealers that has been kicked back and forth between the SEC and the Department of Labor for a decade. He will likely work on that issue with Martin Walsh, the former Mayor of Boston who was confirmed as President Joe Biden’s pick for Labor Secretary last month.

The question remains whether he will strengthen the current law of the land, Regulation Best Interest, through an increased disclosure requirement or take on the larger task of reopening the longstanding debate by taking another look at the definition of fiduciary duty.

When Gensler ran the Commodity Futures Trading Commission he was active in rulemaking, issuing more than 40 rules and only having one struck down by the courts. Many of the issues he is set to tackle were already on the radar of the SEC under Acting Chair Allison Herren Lee. The exam division featured ESG, climate risks and Reg. BI compliance in its 2021 priorities released earlier this year. Lee said the commission plans to look at order flow payments in a Feb. 25 response to a letter from Senator Elizabeth Warren.

For now there is not much worry in financial services about the new leadership at the SEC, according to Champ, who spent nearly five years at the SEC serving as director of the Division of Investment Management, deputy director of the Office of Compliance, Inspections and Examinations and the associate regional director for examinations in the regional office located in New York.

If Gensler surprised the industry by proposing the types of regulations championed by the likes of Senator Warren or others progressive lawmakers, it could cause panic, Champ admits. “People are taking a wait-and-see approach,” he says.

That being said, Champ says that he is a contrarian when it comes to the narrative that there will be some seismic shift in SEC presence between the previous and current administrations. 

“Yes, the Trump administration was deregulatory but from an enforcement and examination perspective, the SEC was incredibly active over the last four years. It is really a disservice to the staff to say otherwise,”  Champ adds. “This narrative that there’s going to be some big change in examination and enforcement is way overblown. There will certainly be more rules, but from the policing perspective the SEC has been pretty darn active.”

However, one area where Champ expects to see a large change from the previous regime is the reemergence of the Financial Stability Oversight Council, created in the aftermath of the financial crisis as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, in order to identify and monitor excessive risks in the U.S. financial system. Gensler was active in supporting the council in his time at the CFTC and Champ concedes that the group housed within the Department of Treasury has been “dormant” over the past few years.

His advocacy for a revival of FSOC will be aided by the Consumer Financial Protection Bureau, another agency created by Dodd-Frank that is likely to see a revival under the current administration. President Biden has nominated Rohit Chopra to the post, an acolyte of Senator Warren who helped create the bureau. The head of the CFPB, along with Gensler’s last two federal posts, chairs of the CFTC and SEC, are among the 10 voting members on FSOC.

During his confirmation process, Gensler has not indicated his preferences to lead the five largest division within the commission, the Division of Enforcement, the Division of Corporation Finance, the Office of Compliance Inspections and Examinations, the  Division of Trading and Markets and the Division of Investment Management. Once he is confirmed, Champ expects names to emerge for those posts and with that more clarity about the tenor of his tenure.


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