When You Buy Cryptocurrency, You Own Nothing

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I am neither for nor against cryptocurrency. If someone wants to use their hard-earned fiat currency to buy bitcoin or ether, go for it. But when you buy cryptocurrency, you own nothing.

This apparently doesn’t bother those who own the thousands of different cryptocurrencies available with a total market capitalization of about $2 trillion. Somewhere between 21 million and 59 million Americans and more than 100 million people globally own crypto, and that number is growing rapidly.

Crypto is so mainstream that denizens of every corner of the financial services industry are looking for ways to profit from its popularity. Product manufacturers, platforms, custodians, fintech firms, and data providers are all responding to the market dynamics.

In the process, cryptocurrency is being repositioned to be more palatable to financial advisors and their clients. Its old image as the currency of choice on the dark web is being painted over to give it a more comfortable quality of familiarity and acceptability.

For example, crypto is being packaged to make it look more like our old friends, mutual funds, ETFs, and SMAs. This will make it almost indistinguishable from other portfolio holdings and reduce anxieties about the operational aspects of incorporating crypto into the mix.

Crypto is now regularly referred to as an “asset class” or an “alternative investment.” Use of this terminology is designed to slip crypto into the tent of respectability and make it seem like just another tool in the financial advisor toolbox.