Cetera Financial Group, the broker/dealer network with more than $475 billion in assets under administration, has approved four spot Bitcoin ETFs for use among its 12,000 affiliated advisors. The firm has also put in place a formal policy around the usage of the ETFs in brokerage accounts, including required training available starting March 25 on the firm’s AdviceWorks portal.
In January, the U.S. Securities and Exchange Commission approved 11 proposals for spot Bitcoin ETFs, in a significant shift in the industry’s relationship to cryptocurrency. The ETFs have seen more than $11 billion in inflows since inception, according to Bloomberg data.
Cetera will allow advisors to recommend the Invesco Galaxy Bitcoin ETF (BTCO), Franklin Bitcoin ETF (EZBC), Fidelity Wise Origin Bitcoin Fund (FBTC) and Blackrock iShares Bitcoin Trust (IBIT).
“The selected funds are sponsored by leading ETF providers with track records of successfully launching new product strategies, and are well positioned with established resources, tools and knowledge,” the firm said in a statement.
"We will continue to proactively evaluate the implications of Bitcoin ETFs and related products and modify our policies accordingly, and we look forward to partnering with our financial professionals to adopt Bitcoin ETFs when appropriate with their clients,” said Matt Fries, head of investment products and partner solutions at Cetera, in a statement.
The firm has created a concentration grid based on the investment objectives and risk tolerance of the client, Fries said. Cetera has also built out its supervisory infrastructure to make sure client accounts are within those concentration limits at the time of purchase.
The training will cover how bitcoin ETFs are created, the cryptocurrency's price history and volatility, its potential use in a portfolio and the various risks involved.
A few other independent broker/dealers have issued policies around Bitcoin ETF usage. Cambridge Investment Research, for instance, is restricting its 3,800 advisors from buying the funds, until they go through a training program created by the firm.
Geneos Wealth Management, a hybrid broker/dealer and RIA with $10 billion in assets, has approved three Bitcoin ETFs for use on its platform, including the Grayscale Bitcoin Trust ETF (GBTC), IBIT and the ProShares Bitcoin Strategy ETF (BITO), which invests in Bitcoin futures. To invest in the ETFs, Geneos advisors are required to take a continuing education course on the new products, and they must sign documentation indicating they read the prospectuses.
When the ETFs were first approved, Commonwealth Financial Network was not allowing its more than 2,100 advisors to recommend them, nor to discretionarily add them to client portfolios, according to a source close to the IBD, who declined to be named. Advisors were limited to accepting only unsolicited orders for the products.
LPL Financial said GBTC is currently the only Bitcoin ETF approved for use at the nation’s largest IBD, with some 22,000 advisors. The firm will not immediately make the new ETFs available, but it is conducting diligence to do so later, with the appropriate controls in place, said Kate Winters, senior vice president of wealth management services.
The firm’s advisors must complete the required training and meet additional account-level requirements to place orders. Once they meet those requirements, advisors are allowed to solicit purchases in brokerage and advisory accounts, and they are allowed to use discretion with available ETFs in advisory accounts.
In January, Axtella, which has 716 advisors and more than $22 billion in assets under management, said it was not allowing the products on the platform. However, the firm was set to consider in an upcoming product committee meeting whether advisors will be allowed to make unsolicited trades on behalf of clients in the future.
Last month, Carson Group, an Omaha, Neb.-based RIA, which has $30 billion on its platform, said it approved just four of the new Bitcoin ETFs, according to Bloomberg.
