Wealth Managers Are Buying Bitcoin and Crypto, but Won’t Advise Clients to Do the Same, Says Retail Brokerage CEO
Prash Puspanathan, CEO and founder of Caleb and Brown, one of Australia’s largest retail cryptocurrency brokerage firms by trading volume and number of clients, says dozens of financial advisors are using his service to purchase hundreds of thousands of dollars worth of cryptocurrency – while they offer no such advice to their clients.
In an interview with Micky, Puspanathan says over half of his clients are from abroad, primarily the United States.
“These are wealth managers, who have their own personal cryptocurrency portfolios. They see value in it.”
According to the report, Puspanathan notes that the “$70 trillion being held in funds for high net worth individuals” makes today’s crypto market cap of $124 billion look like “coffee money.”
Despite money on the sidelines, Puspanathan concurs with many analysts who believe murky regulations and uncertainty are prohibiting financial advisors from telling their clients to load up on Bitcoin. He says mainstream institutional investors are reluctant.
“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.”
In the long run, Puspanathan thinks the market will rebound.
“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.”
Puspanathan, a former psychiatrist whose career took a dramatic turn when he made the transition to run a financial services brokerage, was awarded the Young Executive of the Year 2018 by the Indian Executive Club at Langham on November 17th. Earlier this year, his company was also awarded the ‘Fintech Start-up of 2018’ at the inaugural Stockbrokers and Financial Advisors Association (SAFAA) Fintech Awards in Melbourne.
At the intersection between ‘old-school’ financial services industry and digital assets, Puspanathan says cryptocurrencies are a very effective hedge against financial risk that would come from an impending financial crisis or a drop in property prices.
As for the magic catalyst that will send the markets upwards, he believes the upcoming launch of Bakkt, the new Bitcoin futures exchange from the New York Stock Exchange’s parent company, is the type of traditional structure that financial investors can understand.
While mainstream investors wait for Bakkt, exchanges such as Coinbase, Gemini and Binance, along with investment firms such as Fidelity and Susquehanna International Group, continue to work with regulators worldwide to build more on-ramps for institutional investors who are looking for exposure to Bitcoin, Ethereum and other top cryptocurrencies.