Since bitcoin is not a security it doesn’t fall under the usual purview of the things advisors would normally have to know. With the SEC differentiating “Digital asset securities” from less-regulated “digital assets,” what’s an advisor to do?
We’ve all heard of bitcoin, but what is it really? For independent, registered investment advisors like ‘On Purpose’ host Tyrone Ross it’s … complicated. Since bitcoin isn’t considered an “investment” in the eyes of the U.S. Securities and Exchange Commission (SEC), it’s different from what most investing professionals know. With the SEC differentiating “Digital asset securities” from less-regulated “digital assets,” what’s an advisor to do? According to Tyrone, “As far as crypto goes and advisors being fiduciaries, that is a whole different realm.”
On Feb. 26, 2021, the SEC’s Division of Examinations (Division) issued a Risk Alert noting that “Digital Asset Securities” (i.e., assets issued and/or transferred using distributed ledger or blockchain technology, including, e.g., “virtual currencies,” “coins” and “tokens”) and other digital assets entail characteristics and risks that must be considered in designing a regulatory compliance program.
In this episode of “On Purpose, With Tyrone Ross,” Bryan Courchesne, managing director at Digital Asset Investment Management, and Max Schatzow, counsel at Stark & Stark to registered investment advisors (RIAs), broker-dealers (BDs) and alternative funds, discuss the landscape of compliance for investment advisors concerning RAs and bitcoin.
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