Wealthfront, a provider of automated investment services with $25 billion in assets, now allows clients to invest up to 10% of their portfolio in cryptocurrencies.
Clients can invest up to 10% of their portfolio in cryptocurrencies
Wealthfront announced it will allow its clients to gain exposure to Bitcoin and Ethereum through Grasycale’s trust shares. The company offers personalized and automated investment portfolios for individuals based on their risk tolerance and income tax liabilities.
The 10% cap on crypto investments is meant as a hedge against the volatility of Bitcoin and Ethereum. Unlike brokerage accounts that enable their clients to create any portfolio they want, Robo-advisors such as Wealthfront have more responsibilities to the client.
The company claims to be the first of its kind
Grayscale’s trust shares represent BTC and ETH, which are held in custody by the trust. The shares are non-redeemable, incur 2 to 3% management fees, and come with a six-month lock-up period, meaning institutional investors cannot sell their shares until six months after purchase.
“We limit your allocation to GBTC and ETHE because as a fiduciary, we act in your best interests at all times, and these investments can be riskier and more volatile than most ETFs,” the company explained.
The company also claims to be the first of its kind to offer this type of service. They claim this because Wealthfront uses automated financial software to calculate the percentage allocation in its investment portfolios and executes trades accordingly to avoid losses or high tax charges.