RIAs will not be excessive threat takers in relation to the belief they’ve established of their shopper relationships. An advisory enterprise takes years to construct and is barely as safe as the arrogance purchasers place in it.
If there’s one factor that may rapidly undermine that belief, it’s pointless threat.
For RIAs, the crypto (or “digital asset”) trade has historically been rife with precisely that: pointless operational, authorized and regulatory threat. On the similar time, purchasers are asking for larger entry to digital property. Surveys—together with these from well-established establishments like Financial institution of America and Charles Schwab—point out a rising share of buyers need publicity to digital property.
These calls for locations RIAs in a precarious place the place the very factor they should develop their enterprise—providing entry to digital property—threatens to undermine it on the similar time.
Looking for options, the identical surveys invariably cite “regulatory issues” because the primary barrier to entry. Take the 2025 Bitwise and VettaFi digital asset survey, as an example:
Regardless of regulatory issues topping the record yearly, what’s lacking from these surveys is a tangible dialogue on what these issues are or how companies may navigate this setting. As a substitute, the identical Bitwise and VettaFi 2025 survey presents up a 1-2 sentence evaluation citing “clearer regulation” because the antidote:
This survey is only one instance of a broader lack of true perception on this situation. How can any govt workforce use this for decision-making? The unlucky elephant within the room is that the reply to the “regulatory issues” query pushes nearly all of RIAs away from investing on this asset class.
In follow, “regulatory issues” isn’t a obscure catch-all; it’s a direct enterprise obstacle to providing sure asset lessons.
Based mostly on my expertise and discussions with RIA govt groups, listed here are three vital, real-world roadblocks that designate why many RIAs stay on the sidelines.
What Am I Really Buying and selling?
RIAs want authorized readability on what’s being traded as a result of their operational framework is constructed round conventional asset lessons. An ambiguous “quasi-security” token doesn’t reduce it. Till there’s a definitive classification—one thing that may be processed, reported, and saved underneath the identical protocols used for securities—most advisors merely received’t contact it.
Massive crypto likes to argue and provides authorized opinions on the standing and classifications of its tokens. Nevertheless, RIAs don’t put their shopper relationships in danger based mostly on authorized opinions, and RIA govt groups don’t construct companies based mostly on these opinions. They are going to fortunately wait till such authorized frameworks are written and codified into regulation.
Counterparty Threat from Monetary Intermediaries
It’s trade greatest follow—successfully CYA for an RIA—to companion with correctly licensed custodians, broker-dealers and different monetary intermediaries. Underneath federal securities legal guidelines, these entities should adjust to the Buyer Safety Rule (Rule 15c3-3), which safeguards shopper property by requiring broker-dealers to segregate buyer funds and securities from their very own and to return them promptly upon request. Whereas this doesn’t eradicate all dangers related to corruption or insolvency, partnering with entities topic to those guidelines helps mitigate potential issues for RIAs when managing shopper property and fostering shopper belief.
Sadly, there’s a lack of SEC-registered intermediaries within the U.S. market, as most legacy crypto platforms opted for state licenses or cash transmitter licenses—opening up an excessive amount of threat for many RIAs and their purchasers.
Inner Compliance Insurance policies and Procedures
At any SEC-regulated advisory agency, sturdy inner compliance controls are paramount. Advisors should reveal they aren’t front-running purchasers, that each one trades align with fiduciary obligations, and that data are simply auditable. However crypto trades 24 hours a day, 7 days per week, three hundred and sixty five days a yr, making a nonstop cycle that conventional compliance methods are ill-equipped to deal with. Constructing and staffing a round the clock monitoring framework, integrating new recordkeeping instruments and guaranteeing sturdy oversight of rising markets is a large enterprise. Till digital property are a need-to-have, and never a nice-to-have, RIAs will hesitate to put money into overhauling their inner compliance course of and insurance policies.
Trusted Sources
To actually perceive what “regulatory issues” imply, survey practitioners ought to go straight to the professionals the place it issues probably the most—the CIOs, compliance officers, and operations executives who’re the gatekeepers to any new investible asset lessons. If a survey doesn’t seize their perspective, the outcomes—as we’ve got seen—paint an incomplete (and infrequently overly optimistic) image of advisor sentiment.
The subsequent time a crypto survey highlights “regulatory issues” as a barrier to entry, dig deeper. What issues? Has the sponsor mapped out potential options? Advisors want clarification on asset classification, counterparties they’ll rely on, and turnkey inner compliance procedures as a place to begin for any crypto conversations. Till then, the belief an RIA has with purchasers will trump any near-term demand round rising funding merchandise.
