$BTC Crypto for Advisors: Are Crypto SMAs Right for Institutions?

There’s no doubt crypto ETFs have made a splash since their U.S. debut earlier this year, with potentially record-breaking growth. In today’s issue, Leo Mindyuk, CEO of ML Tech, looks at the differences between investing in crypto via Separately Managed Accounts (SMAs) and ETFs.

Then, CoinDesk Indices Kim Greenberg Klemballa answers questions about SMA ownership and adoption in ‘Ask an Expert.’

The Advantages of Actively Managed SMAs over Crypto ETFs for Institutional Investors

Crypto Goes Mainstream

Earlier this year, cryptocurrencies made a great leap toward mainstream adoption as the U.S. Securities and Exchange Commission finally approved trading U.S. exchange-traded funds (ETFs) that track spot bitcoin and ether.

This meant that, for the first time, investors could trade regulated Bitcoin and Ether spot-based instruments on regulated U.S. exchanges. More importantly, it meant that crypto had finally gained the imprimatur of securities regulators and was no longer considered some sort of rogue investment, bought and sold only by technology fanatics.

Crypto SMAs vs ETFs

As a result, millions of novice investors are getting their first taste of crypto by buying bitcoin and ether ETFs. But for more experienced institutional investors, are ETFs the best way to invest?

Separately Managed Accounts, or SMAs offer significant advantages over ETFs for institutional investors to invest in crypto via actively managed accounts.

SMAs’ Benefits Over Crypto ETFs

What Are SMAs?

Crypto SMAs are portfolios of digital assets managed on your behalf by a professional investment manager. This last part – “professional investment manager” – is particularly important with crypto. Crypto is still new, in some ways, crypto doesn't trade in the same ways as stock does. Plus, crypto “fundamentals” don’t refer to earnings and accounting metrics but rather to a whole set of new metrics related to usage, their issuing blockchain, individual activity (which can be seen) of huge holders.