Adviser tech platform Capitect announced Thursday it has joined forces with online cryptocurrency exchange Coinbase to allow Capitect users to connect directly to clients’ Coinbase accounts to pull data for portfolio management and reporting, such as history, positions, and transactions.
Coinbase, which is set to go public via an initial public offering April 14, has approximately 43 million verified users, according to the fintech’s website.
The partnership integrates the two platforms, so historical and ongoing client data is automatically reconciled during import to calculate daily performance history, similar to the way Capitect manages custodian, held-away and manually entered asset information. Coinbase accounts can also be aggregated with other client accounts for performance and asset allocation reporting, and for billing and rebalancing.
Capitect CEO and adviser at Mariposa Capital Management Edwin Choi is bullish on building technology for advisers by advisers, including tools that help advisers manage clients’ growing holdings of digital assets.
“Advisers have been demanding this functionality in order to provide a holistic approach to their management of portfolios, particularly as digital asset adoption is becoming more widespread among clients,” Choi said in a release.
As the industry waits for packaged crypto-investments such as exchange-traded funds and related funds to be approved by regulators so that they can be custodied at traditional firms, now is the time for advisers to show clients they can be leaders in managing crypto investments, Choi said. Capitect has plans to integrate with more crypto exchanges, he said.
Technology providers are partnering up with crypto-focused firms to provide tools for advisers to include digital assets in their portfolio management services and operations. The new tools aim to address the need for advisers to stop avoiding cryptocurrencies and, instead, adopt technologies that help.
Another digital asset tech provider, Blockchange, has partnered up with Willow, a registered investment adviser with about $140 million in total assets under management, to offer a separately managed account option for advisers, the companies announced last Tuesday.
In February, Blockchange introduced its first SMA in partnership with Arbor Digital, a division of wealth management firm Arbor Capital with more than $250 million assets under management.
The new Willow Crypto SMA will allow advisers to outsource the management of their clients' digital portfolios to Willow. A major differentiator of the SMA model is that the investor gains direct ownership of their digital assets, said Willow Managing Director Paul Farella.
“This is in contrast to other vehicles like ETFs, mutual funds, or ETNs that may hold digital assets where your money is pooled with other investors and you do not get access to the potential tax benefits of direct ownership,” he said.
Willow also brings a focus on environmental, social, and corporate governance, wealth management and sustainable investing to manage the asset allocations and client onboarding process.
Willow Crypto manages the SMA and charges a 1% annual management fee. The SMA leverages Blockchange's BITRIA digital turnkey asset management platform to onboard clients and manage portfolio allocations, with all assets custodied by Gemini Trust Co.
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Pro-bitcoin professionals, however, say the cryptocurrency has ushered in change.
“LPL has evolved significantly over the last decade and still wants to scale up,” says one industry executive.
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