Eric Ervin, Head of Institutional Sales and CEO of Securitize for Advisors, joined Keith Black, Managing Director of RIA Channel, to discuss how alternative investment managers are tokenizing funds to trade on blockchain platforms.
Securitize is a platform that allows asset managers to tokenize their funds so that they can be traded in the blockchain ecosystem. The platform allows advisors and investors to access digital assets, such as bitcoin and Ethereum, across multiple custodians and real-world asset (RWA) funds managed by firms such as KKR, Hamilton Lane, and Blackrock. Tokenized funds can have lower fees and minimum investment requirements than traditional versions of the same fund.
Ethereum and bitcoin are large capitalization assets that comprise two-thirds of the digital asset industry’s market capitalization. The Securitize team has built model portfolios that advisors can use in SMAs to access digital assets beyond Ethereum and bitcoin with larger betas and potential upside returns. Securitize allows advisors to include crypto assets in their asset allocation models, billable AUM, and tech stacks, such as Orion and Black Diamond.
There is currently no wash sale rule in crypto tokens, which leads to meaningful opportunities for tax loss harvesting. The tax treatment of ETF shares is different than that of the underlying tokens. The launch of the bitcoin ETF has spurred advisor conversations where clients revealed substantial holdings in digital assets that the advisor did not have previous knowledge of.
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