Wealthfront Adds Crypto Investments to Its Trading Offerings

Wealthfront automated investment service firm has announced that it has added two cryptocurrency trusts to its variety of funds.

The robo-adviser, which has $21.5 billion in assets under management, added the Grayscale Bitcoin Trust and Grayscale Ethereum Trust to its menu of available investments, a list which also includes a handful of Dimensional Fund Advisors’ (DFA) new EFTs, a variety of ARK Invest’s actively-managed funds, and Wealthfront’s own Risk Parity fund.

Wealthfront customers will be able to allocate up to 10% of their total portfolio to the two trusts, with cryptocurrency’s volatility mentioned as the reason for the restriction.

The trusts provide “indirect exposure to cryptocurrency”, and customers opting to buy units of the trusts would not be able to allocate more than 10% of their portfolio. "We limit your allocation to [the crypto trusts] because, as a fiduciary, we act in your best interests at all times, and these investments can be riskier and more volatile than most ETFs," Wealthfront stated.

The move made by Wealthfront makes it the first major robo-adviser in the US to provide its clients with cryptocurrency exposures. The new investment options have made it easy for clients to get exposure to Bitcoin and Ethereum right in their Wealthfront portfolio, no wallets required.

However, these crypto trusts come at a cost. While several of the new funds that Wealthfront offers are eligible for the tax-loss harvesting, that is not the case with digital asset trusts. Furthermore, Wealthfront stated that investors would not be able to borrow against their cryptocurrencies for a loan via the robo’s portfolio line of credit.

Crypto Changes Fortunes of Mainstream Firms

The announcement by Wealthfront comes at a time when a rising number of fund managers and wealth management firms are embracing the crypto market to tap a new client base and seize a source of fresh revenue.

In April this year, Wealthfront asset management firm announced that it was examining options to enable its clients to add crypto assets to their investment portfolios. Therefore, the US asset manager has implemented what it announced in the past as it has now begun allowing its customers to invest in cryptocurrencies.

The development is the latest indication of increasing acceptance of crypto assets by mainstream finance.

In March, Morgan Stanley became the first major US bank to provide its wealthy clients access to Bitcoin funds. Last month, JPMorgan Chase & Co started allowing all of its wealth management clients to access cryptocurrency funds. In May, Wells Fargo began offering cryptocurrency exposure to its wealthy clients.