Looking for crypto investing advice? Why your financial adviser’s lips may be sealed

Regulations appear to be lagging the rapid pace of cryptocurrency adoption.

| More on:
A person holds out a blank piece of paper.

Image source: Getty Images

Looking for crypto investing advice?

You’re not alone.

With Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) both breaking into new all-time highs in recent days, investor interest in cryptocurrencies is booming.

And if rocketing prices weren’t enough, last week saw the launch of the first ASX listed crypto-related exchange-traded fund (ETF).

The BetaShares Crypto Innovators ETF (ASX: CRYP) kicked off on the ASX last Thursday. Rather than investing directly in Bitcoin, Ether or other altcoins, the ETF offers investors exposure to a range of crypto mining and blockchain-related companies.

By the end of its first day of trading, the crypto ETF notched up net buys of $39.7 million, breaking all the records for an ETF on its first day of trade. (Details here.)

CommBank enables customer crypto services

Last week also saw Commonwealth Bank of Australia (ASX: CBA) become the first Aussie bank to offer crypto services to its customers. Aside from Bitcoin and Ethereum, CommBank reported its customers will be able to buy, sell and hold up to 10 selected cryptos, including Bitcoin Cash (CRYPTO: BCH) and Litecoin (CRYPTO: LTC).

But don’t go asking CBA’s certified financial advisers which tokens have the better outlook.

In fact, as The Australian reported, you likely won’t get that advice from any of Australia’s 20,000 qualified advisers.

Their lips are sealed by red tape

It looks like this is a situation where slow-moving government regulations can’t keep up with the rapid pace of crypto adoption.

As it stands, Australia’s small army of financial advisers aren’t allowed to offer any advice on crypto at all. Rather ironically, people outside of certified financial advisers can offer most any kind of personal insights into cryptos they see fit across a range of social media.

Part of the problem lies with advisers’ professional indemnity insurance.

A recently renewed financial adviser professional indemnity insurance contract, as reported by The Australian, stipulates:

The policy is extended (to include) virtual currency exclusion arising directly or indirectly from or in any way connected with cryptocurrency, alternative cryptocurrency, digital currency, or any other form of virtual currency.

Now advisers might be able to advise so-called “sophisticated investors” on their virtual currency investing plans. Which is also rather ironic as these high experience, high wealth investors are likely in less need of exactly this type of advice than mum and dad investors.

Commenting on the situation, financial adviser James Gerrard said, “We have a very odd situation now that I can’t, under the terms of licence or insurance, advise on something from CBA.”

Dante De Gori, CEO of the Financial Planning Association, added, “The current restrictions are going to have to change. First, we have to get advisers qualified in the topic, then we have to get licence issues sorted out and crucially we are going to have to get the insurers to come on board.”

Until the red tape is sorted, however, crypto investors would do well to do their own thorough research. And never invest more than they can afford to lose.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin and Ethereum. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Cryptocurrencies

ASX gold inflation gold bull figurine standing on stock price charts representing rising asx share price
Cryptocurrencies

Is winter coming for the crypto world? A bull and bear case

Key points The crypto world is now A$1.76 trillion lighter following a rough run for the alternative asset class Another …

Read more »

A black cat waiting to pounce on a mouse.
Cryptocurrencies

Bitcoin and Ethereum are at 6-month lows. Is now the time to pounce?

Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) are both trading right at their levels of 24 hours ago. At the …

Read more »

a cryptocurrency blockchain miner acts with surprise upon looking at his phone while standing behind a conglomeration of technology to access cryptocurrency.
Cryptocurrencies

Could this Achilles’ heel bring Bitcoin tumbling down?

Key points The world is in the midst of an energy crisis Bitcoin’s proof-of-work protocol is hugely energy-intense This Achilles’ …

Read more »

A ripped piece of paper with the Bitcoin logo.
Cryptocurrencies

Bitcoin in the crosshairs. What Russia’s proposed ban could mean: expert

Key points Bitcoin down 26% in 2022 Crypto market faces potential ban in Russia What’s the likely impact of a …

Read more »

A bitcoin trader looks afraid and holds his hands to his mouth among graphics of red arrows pointing down
Cryptocurrencies

$1.4 trillion evaporates. What’s happening with the crypto crash?

Key points The crypto market is down $1.4 trillion from its peak Bitcoin and Ethereum are trading like risk assets …

Read more »

Man sitting at a desk facing his computer screen and holding a coin representing discussion by the RBA Governor about cryptocurrency and digital tokens
Cryptocurrencies

Investing in crypto? ASIC chairman sounds warning

Key points S&P/ASX 200 Index (ASX: XJO) down 4.8% in 2022 Bitcoin (CRYPTO: BTC) down 14.4% in 2022 Ethereum (CRYPTO: …

Read more »

a mysterious person wearing a black hoodie points a finger to a vast illuminated graph tracking bitcoin value with bitcoin symbols floating above the chart.
Cryptocurrencies

Bitcoin (CRYPTO:BTC) takes most popular crown, here are 3 cryptos hot on its heels

Key points Bitcoin takes top spot as the most popular crypto among Australian investors on eToro Opened positions in the …

Read more »

bitcoin price drop, decrease, fall, plunge, bitcoin uncertainty
Cryptocurrencies

Bitcoin could hit ‘death cross’ soon! Expert explains why this is great

Key Points Bitcoin has fallen more than 34% since November It’s now threatening to hit the ‘death cross’, when the …

Read more »