Brokers are losing clients by ignoring cryptocurrencies | Opinion

As cryptocurrencies are coming out of the shadows, brokers’ clients become more interested in crypto investing than ever before — nearly all surveyed financial advisors report that customers are asking about crypto investments. Among wealthy investors, in particular, high-net-worth individuals, this interest is even stronger — оn average, they already put around 15% of their portfolios into alternative assets like cryptocurrencies.

Yet, surprisingly, many brokers continue to treat crypto like a speculative business, rarely using it behind ETF wrappers. Only 35% of them currently offer direct access to crypto, but it’s a strategic failure for the other 65%…

Distribution is the only missing piece

Some might think that brokers are hesitating because the technology isn’t ready yet, which is not true. The systems for trading and holding crypto are already in place. In fact, the tools today are safer and more advanced than ever.

Trusted crypto platforms follow strong security protocols that go beyond traditional standards. These include regulated custodians — secure storage providers protected even better than banks with multi-layer encryption. Moreover, they carry insurance policies that cover nearly all the risks, even including cyber ones.

There are also advanced trading systems made especially for big institutions. These systems can execute orders very quickly, use smart technology to find the best prices on different blockchains, and connect to large sources of cryptocurrency liquidity to improve trading options. They provide real-time risk management, and recently, they started to even use AI to track unusual activity and adjust limits. So, everything seems to be ready and just waits to be set up by brokers as well.

The legal part doesn’t lag either. Crypto regulations are developing rapidly now, as the topic has received a lot of attention at the state level. The United States and the European Union have already created separate laws for cryptocurrencies — Europe passed the Markets in Crypto-Assets Regulation and removed crypto assets from the exotic corner, and the U.S. has also taken a big step, signing an important crypto law, the GENIUS Act. 

At the same time, it is important to understand that these laws are at an early stage of development, so there may be shortcomings. However, there is no need to take this negatively; on the contrary, any improvements in the environment should be perceived as an opportunity to gain a competitive advantage.

ETF access is not full access

Another common broker statement is that they actually offer crypto. In fact, the thing they sell is Bitcoin investments through ETFs. However, they often forget that this approach distracts from the very essence of crypto investment.

Although ETFs are really convenient for portfolio modeling, they take away many of the cryptocurrency’s unique features: no constant trading at any time of the day, no opportunity to participate in staking, and it is impossible to move assets to the blockchain or try new networks independently.

So, investing through ETFs is the most passive and “blurred” method of ownership, which does not give investors full control over their crypto. The owners of such ETFs do not become the real owners of the cryptocurrency, and deprive the holder of the possibility to diversify the portfolio. If, before, crypto was considered too volatile, now it’s a great tool not only for diversification but also for receiving additional income: about 70% portfolios that included cryptocurrencies outperformed those without in terms of Sharpe Ratios.

The market is moving on

The cryptocurrency market is attracting investors so fast that even ex-sceptics are getting on board. According to Goldman Sachs, around 15% of family offices (traditionally considered conservative) already have some exposure to crypto assets, and more than half are thinking about entering the market in the near future. \

As interest grows, investors are beginning to outgrow basic trading apps. They want more features, especially those who have many figures in their bank accounts, because managing a multimillion-dollar crypto portfolio through a phone app doesn’t feel professional anymore.

What this is in practice is a noticeable evolution in demand, as investors are no longer limited to buying just Bitcoin (BTC) or Ethereum (ETH) — there is a need for variety and an institutional level of support, just like the affluent get for stocks or bonds. 

Their interests cover a wider range of assets: from medium-cap tokens and stablecoins to DeFi projects, and even new areas like AI-related tokens. With such an expansion of the portfolio, the requirements are also growing — they want to have risk management tools at the same level as the traditional financial sector. Also, big fish clients expect thoughtful tax planning and accurate profitability reporting. 

The most interesting part here is that if rich investors can’t get what they need from their advisors or brokers, they don’t wait around. Already, 42% of UK wealth clients say they plan to invest in crypto outside of their regular financial relationships with their brokers. It’s a clear message for financial managers: you either adapt or leave.

Ignoring crypto means losing clients

Like it or not, financial history has always shown that the preferences of the wealthy shape the direction of the entire industry. What starts with multimillionaires soon becomes the new standard for everyone else. The same case was with early tech stocks in the 2000s, and now they are a part of many portfolios.

Today, crypto is following the same route. Brokers that adapt now will earn long-term loyalty. Those who continue to resist will watch their clients leave them.

Anthony Agoshkov

Anthony Agoshkov is a co-founder of Marvel Capital, a proprietary algorithmic trading firm specializing in high-frequency trading, or HFT, strategies. He is a seasoned C-level executive with over 10 years of experience in the trading and asset management industry.