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Topics covered in this week's episode:
- Biden Vetos SAB 121 Repeal
- Coinbase adds another $25M
- SEC told 9 $ETH ETF issuers to get their S1s ready
- Vanguard will also ban $ETH ETFs
- $USDT might not be MICA compliant
- The state of RIA education
Creators & Guests
Host
What is Weekly Crypto Check-In?
Hosts Robert Swarthout and Andres Sandate cover the last week's worth of crypto news, providing insights and opinions on this quickly evolving space from a fund managers perspective.
Welcome to another episode of the weekly crypto check-in recorded on June 5, 2024. I'm your host Robert Sfortha. I'm one of my cohost, Andres Sendate. How's it going, Andres?
Andres Sandate:Good, Robert. Welcome back. I know you've been, traveling, last week and over the weekend, so, hopefully, it went well.
Robert Swarthout:Went well. I was out in Austin, and, it's warm out there. Apparently, it's not as warm as it's gonna get. Some of the Austin locals were telling us that, their their days above a 100 consecutive streak is probably about to start here. So Yeah.
Robert Swarthout:We'll see. It's, it def we've been blessed here in Atlanta recently having relatively mild temps Right.
Andres Sandate:So Right. Well, crypto, was the the the topic of Austin, I guess. But I think the last time we recorded, I was I mentioned, you know, hopefully get some good barbecue. So before we jump into the weekly crypto check-in, I'm curious if you, had any good food in Austin.
Robert Swarthout:Yeah. We, one of the nights, we went to, Terry Black's, which I believe we attended when we were there a year ago. Mhmm. It's, quite good. The part that kinda surprised me about it is I was when we're standing in line, I was looking and it said established in 2014.
Robert Swarthout:It's, like, one of the top rated places in Austin. Like, how did something come out of nowhere in 2014? You think this would have been, like, established in 1964, not 19 or 2014. I don't know. Kind of interesting little tidbit there.
Robert Swarthout:So
Andres Sandate:All the people that started in 64 sold out in 2014 and yeah.
Robert Swarthout:New man maybe it's new management on the road.
Andres Sandate:Out to the hills and restarted with all the California people moving out to the hills. Restarted with all the California people moving out to the hills. That's true. They're probably on their second or third vintage. Yeah.
Andres Sandate:Well, cool. So, man, once again, we start this week's, headlines with, with politics.
Robert Swarthout:So Yeah. And I and I wouldn't be surprised if we touch on politics almost every week from the remainder of the year, unfortunately. It's not my most favorite topic, but it certainly is driving news right now. So Yeah. Biden vetoed the, Saab 121 repeal that the house, the senate, with overwhelming bipartisan support, voted, to send to the president, and he vetoed it for, like, 5 PM.
Robert Swarthout:Mhmm. You know, he did threaten early on in the process before it had passed the Senate that he would veto it. I think there was sentiment and belief that maybe he had changed his opinion because before he got a chance to, to veto, he, said that he was for the, fit 21, which we will, which we've talked about last week. Yeah. That's a whole framework regulatory thing that needs some work, but at least it's, like, an initial start for crypto.
Robert Swarthout:So it was like maybe, you you know, the Biden administration had changed their tune. Maybe they had seen the light of sorts, and then he vetoed. So I don't know. I it's it's disappointing. So I, I immediately had to go look.
Robert Swarthout:I was like, what happens when the president vetoes? Who gets to vote? Right. I know that there's a process.
Andres Sandate:Well, it goes back to the house. Right? And as It goes back to
Robert Swarthout:the house.
Andres Sandate:The 2 thirds majority?
Robert Swarthout:2 thirds. Exactly. Yeah. So the house, I don't think was it 2 thirds initially, but it doesn't seem like it would be too far away, because it did have all the Republicans plus I think like 70 Democrats. So I don't know the exact math there, but it's maybe they can rally and, get that done.
Robert Swarthout:So we we'll see. It and, again, stop 21 was all about, banks, holding on the balance sheet, crypto Right. Custody for their clients and kinda having to hold it as a liability. So I don't know. Time will tell.
Robert Swarthout:Yeah. You can probably hear disappointment in my voice. I I was so excited. It felt like we were moving and then
Andres Sandate:Yeah. There might be speaking of you were in Austin, the consensus conference was in Austin, but it felt maybe like we were gonna start to see some bipartisan and some consensus around, like, sensible legislation. And, you know, you have the ETFs, getting approved or at least, you know, pending. We're gonna talk about that here in a minute. You have the Yeah.
Andres Sandate:Bitcoin ETFs trading. It's like you start to feel like the market and the dynamics in DC are moving in favor. It's certainly a healthier environment and backdrop than it was 2 years ago, 3 years ago, but then you have this. I think there's a lot of, folks out there that, you know, are suspicious of the White House, position on crypto. And Right.
Andres Sandate:Is this driven by politics? You know, Trump really had first mover advantage, really, several months ago in terms of adopting a pro crypto stance. Right. And now you're seeing a little bit more offense, on the part of, you know, the democrats. And according to what you read in the headlines, when you dig in, there has been a lot of outreach to the crypto community about what would sensible legislation look like, etcetera.
Andres Sandate:Whereas before, you know, it was like death to crypto
Robert Swarthout:Mhmm. You know,
Andres Sandate:a couple of years ago when, you know, when, you know, Biden's White House issued the, basically, this, you know, directive Mhmm. That crypto is awful and terrible. So, yeah, it's it's anybody's guess, but I think you're right. We're gonna see a lot of these headlines over the next, 6, 7 months.
Robert Swarthout:That's yeah. And it's, you know, I was in a conversation this, earlier this week, and somebody was, like, brought up, you know, all this anti crypto stuff and this Saab 121 stuff is largely the, brainchild of Elizabeth Warren. And they were like, if you really look at her platform, she is all anti something. Like, anti big bank, which ironically is hurting Saab 1 Saab 121 actually, like, is hurting the big banks, but also hurting crypto. And and in her mind, crypto's bad, so she and I I you can make the argument that she should let Saab 121 go into the big banks so it would hurt them.
Robert Swarthout:Yeah. But obviously, it's not that's not the way it's working out right now. But she's basically she's rarely for something.
Andres Sandate:And she's Well, what gets clicks and what gets what gets headlines is her taking on from that progressive position, like taking on big industry, taking on, you know, Wall Street, taking on, you know, pick your industry, you know, and it's, I don't know. For me, like, I I don't follow politics probably as closely as you do when it comes to crypto. But one thing
Robert Swarthout:Yeah.
Andres Sandate:That that I do do is I try to get a better read on and a better understanding of, like, what are the motivations behind
Robert Swarthout:Right.
Andres Sandate:You know, whether it's a bunch of guys are giving money to these packs, which we're gonna talk about. Or, and I think that's the investor in me is, like, coming, at things from the standpoint of, like, objectively. Sure. What are the merits? You know?
Andres Sandate:And what's the investment case? And I'm always like, what's her case? What's her agenda? You know? You can't just rail about a topic and be against it when tens and, eventually, 100 of millions of people worldwide are gonna use crypto.
Andres Sandate:You have to start to have a conversation about what is sensible, reasonable, whatever term you wanna use, like, legislation look like. You know? So
Robert Swarthout:Yep. You know? So on the topic of, you know, congressional representatives. So our second point here, Coinbase adds another 25,000,000. So they gave that to the Fair Shake, Super PAC that is crypto focused.
Robert Swarthout:Collectively, among the I think it's 5 super packs, there's this one that is much larger than the most. I think that Fair Shake is up to a 160,000,000 total raised, but all 5 are over 200. And, you know, they saw early, wins in the, back in May, and I guess there's some stole some elections going on in other states right now Yeah. Primaries, but, some early wins. And I you know, again, I don't know if that contributed to some of the democrat swing and opinions the last month or last 2 week 2 or 3 weeks.
Robert Swarthout:But, is the, you know, the the crypto companies in particular that have the capacity to do the, I guess, the way that Washington works by, you know, political donations and or, focusing just on giving money to candidates that are crypto or pro crypto seems to be working, at least the earliest the the early, attempts at it. So fingers crossed.
Andres Sandate:I mean, yeah, I I've never been a lobbyist, but from what I understand, right, like, the I have a couple of really good friends that are lobbyists at the state level. Okay. And they represent you know, they work for effectively these consulting type firms, you know, where the firm takes on, whether it's a trade, you know, it's a trade group or they represent an industry. Right?
Robert Swarthout:So
Andres Sandate:it'd be agriculture. It could be telecommunications. And they they work the halls of the state capital, in this case in Atlanta, talking to legislators literally on their way from, like, the floor to their office, and they might be down there all day and get FaceTime with 3 or 4 important key legislators. Again, this is on the state level, but it works the same way in DC. Right.
Andres Sandate:So so these lobbyists, you know, are are obviously representing big industry, small industry, everything in between, but they are backed by, you know, these, well, I would say backed, but they are they are driving an agenda. They're driving, set of issues, and then you combine that with the packs. There's a lot of influence, And if nothing else, an audience that's being paid for.
Robert Swarthout:Absolutely. Yeah. It's, it's quite the game.
Andres Sandate:It is. It's the game behind the game. True.
Robert Swarthout:Yeah. Well said. So, so our third point here,
Andres Sandate:it wouldn't be a crypto update without something to do with the SEC either. So That and ETFs.
Robert Swarthout:Right? I mean Yeah. And ETFs. Yeah. So this one, the SEC, we we mentioned it last week that the SEC, had approved, these 9 ETH, ETFs.
Robert Swarthout:So there's actually 2 steps or 2 kind of you can think of it as nuclear keys to launch these. There's the 19 b and then there's the s one. Two different sides of the SCC actually approved the application. There's slightly different versions, forms to fill out of sorts. The 19 b has been approved, that key is turned.
Robert Swarthout:The s one is what they're currently working on now. It may take a couple weeks. I did learn this, earlier this week that traditionally, both of those forms are functionally approved at the same time and both keys are turned, basically, simultaneously. This is a little bit odd, you know, so I guess it's the the SEC's way of treating crypto differently. Yeah.
Robert Swarthout:But to have them turn
Andres Sandate:I've only ever heard of the s one, but so so there's a step one that took place and is done. Now the step 2 is the s one, which is effectively the document that most investors are familiar with that they can go and read. It's it's almost a prospectus. Right? Exactly.
Andres Sandate:Yeah.
Robert Swarthout:Well, you know, and it defines, you know, like custody and all that kind of stuff. So, you know, it's just interesting to kind of hear that, you know, admittedly, I I'm curious about learning and this is something I like learning about it. I just wish I could learn about it in maybe more, I guess, what I consider more fun way, than having to talk about it in a in a news cycle like this. But Yeah. So
Andres Sandate:But the the headline was that the SEC came back to the issuers and their attorneys and said get them ready to go. Get them being the s ones. Get your prospectuses ready to go Yep. To sort of, the public.
Robert Swarthout:Last Friday, they were told that they have their first draft in. I don't know if it's gonna go through I think the Bitcoin one's been roughly through 4 or 5 draft revisions. Who knows? I know that there's no staking allowed, so it's functionally no different than the, the Bitcoin ETFs. So and and again, it's only cash create.
Robert Swarthout:There's no in kind or anything like that, which was a topic of a, panel that I listened to on Monday, and it was it is a bummer, because it's not not the way the rest of the, any any type of ETF works effectively. These these are very different in that nature. Yeah. So I guess continuing on the topic of Ethereum ETFs, Vanguard kinda came out and not, like, publicly announced, but it was it was shared that they also will not be supporting the Ethereum ETFs because in their mind that they are not invest investment worthy. I I I mean, I they're they're entitled to whatever opinion they want.
Robert Swarthout:They are a huge player, but I think that if I'm not mistaken, there are CEOs on the way out. There's a new one on the way in, and it may and maybe the sentiment's different with that person. Maybe they're willing to take up that or maybe it's such a cultural thing within Vanguard that it's not something that that new CEO will want to deal with. But Yeah.
Andres Sandate:Yeah. I mean, look. I I don't know if it's, cultural. It's, you know, it's it's they are clearly one of the largest index, and ETF issuers and providers, you know, along with BlackRock and, you know, Fidelity and Invesco and a handful of others. And I would say they probably do reputationally have a more stick to your knitting.
Andres Sandate:They were they were one of the the later groups to come out with robo advising and robo investing, for example, when many other, you know, do it yourself platforms were early. So when they do things, they tend to be, I would say, a little bit, more like Apple, and not in the cultural sense, but in the sense of they may not be the innovator. They may be the late adopter and then take it to the masses, if you will, if that makes sense.
Robert Swarthout:Yeah. Absolutely. Yeah. So Yeah. You know, there's different ways they could approach this.
Robert Swarthout:They could be setting, you know, safeguards in place. You know, like, I might use the example. This conference I was at, the gentleman from MassMutual is there. So the insurance company. Right?
Robert Swarthout:Very much an old company. In many people's eyes, probably a slow moving ship. Yeah. They are literally working on, finishing their policies so that there's roughly 7,000 advisors can be selling Bitcoin ETFs probably by this fall.
Andres Sandate:Yeah.
Robert Swarthout:They're gonna allow up to a 5% allocation, so there's a guardrail. And if it runs up to 10% of a portfolio, they'll force a rebalance. Those are very aggressive numbers. Yeah. I I think.
Robert Swarthout:Yep. So I guess kudos to them for being, like, maybe forward thinking in that sense, but it's it's kind of the contrast of what we're just talking about here with Vanguard. It's kinda like, no. You can't touch it at all.
Andres Sandate:Well Yeah.
Robert Swarthout:Well you could put more rails around it.
Andres Sandate:Yeah. You could. And and you could allow people to start to tiptoe, if you will. But here's the here's the other thing. And as somebody that's now a wealth adviser, the the industry of of financial advising, financial planning, wealth advising is, the term is often used graying.
Andres Sandate:Right? It's an older demographic, and there's a need for younger, more diverse advisers. Right? The country is needing to produce more CFPs and just more people to manage people's wealth, and that's because we have a growing population. We've got more retirees.
Andres Sandate:We have more people that have came out today in the Wall Street Journal, more investment income than ever before, record amounts.
Robert Swarthout:Yep.
Andres Sandate:So you have all this wealth and whether you call it wealth or just retirement savings, you have all this capital that needs to be managed. Well, when these people are retiring, whether they retire at 60 or 70 or maybe even a little later since financial advising largely is a job you can do, you know, probably largely into your seventies with technology.
Robert Swarthout:Right.
Andres Sandate:Or even later. The reality is you need younger advisers. And where I'm going with this is if you're trying to recruit somebody that is making a decision about a career at 20 or 30 years old and saying, you can't use alternatives, you can't use crypto, You can't do. You can't do. You can't do.
Andres Sandate:It's like that person has grown up, you know, over the last 10 or 20 years with access to everything in their pocket via phone. Right. And they're gonna wanna have access to crypto. They're gonna wanna have access to alternatives. They're gonna have access to all the solutions that they can, you know, offer to their friends.
Andres Sandate:So to me, we're just we're gonna just continue to see more of these firms like MassMutual, which on the surface, you look at them, they're a 150 year old insurance companies, and they're recognized and, like, to compete, I think, for advisors
Robert Swarthout:Yeah.
Andres Sandate:And to be thought of by their peers as, you know, modern. Yeah. You have to embrace nontraditional strategies. Yeah. And, you
Robert Swarthout:know, if if you think about it from a pure, like, almost selfish standpoint for the business, they they basically bill on AUM. Right? Like, you you don't want held away money.
Andres Sandate:Right. Let them talk. Yeah.
Robert Swarthout:Yeah. Let them buy it within the portfolio, and then you get to charge on it. But, like, anymore, plea please keep it away. We don't we don't think it's gonna invest type of time.
Andres Sandate:So So Vanguard will not be playing in the sandbox yet, but, but, you know, there's a lot of other players, I think, is the takeaway.
Robert Swarthout:Yep. Yep. And, you know, it's not on this bullet point, but, you know, the, the Wisconsin Investment board. Investment board. Yeah.
Andres Sandate:State of Wisconsin investment board. Yeah.
Robert Swarthout:Quite, famously announced that they have a bunch of, Ethereum excuse me, Bitcoin ETF linked. And, you know, they are, I think, one of the 5 big ones that people tend to look to. So maybe that is, you know, that that gives the the, the clarity or the the leeway for other investment advisers to kinda do what their peers are doing, especially if it's one of the big fives. That was big news. That it really should be on a ballpoint here, but I missed it.
Robert Swarthout:And it it came to mind, so I thought I would mention that.
Andres Sandate:We we talked about that briefly that some of these public filings are coming out about who owns what, and some of these large institutional investors are subject to, what are called FOIA laws.
Robert Swarthout:So Yeah.
Andres Sandate:With with the requirements in different states are different, but I would expect to see more, of the, you know, at least the public investors, the the public pension plans that are subject to, reporting for transparency, governance reasons to start to talk about whether they do own crypto or they don't. And even if they don't own crypto, what I'll be watching for, Robert, is what is the conversation at the board around crypto? And even if it's we're not ready or we're not gonna we're not gonna start investing, I think they're gonna at least be having the discussion. Be curious to see what those minutes look like as they could start to come out for the, the second and third quarter of this year.
Robert Swarthout:Yeah. That that will be pretty fascinating. So our next point, so USDT, the stable coin, may not be MICA compliant. MICA is the the regulation framework that's put in place in the EU that member states are currently adopting. And I believe by the end of the year, it has to be fully adopted if I'm not mistaken, but relatively soon.
Robert Swarthout:And this kind of flew under the radar a little bit. I didn't see it in tons of crypto news, but this, a gentleman, he's he's speaking for the European secretary general on for blockchain. He's it's some kind of, like, technology position. He he basically is quoted as saying Tether won't be in the in Europe because it's not Meeker compliant. My guess is because there's not enough oversight.
Robert Swarthout:Tether is probably the world's most profitable business on a per employee basis, and and maybe they're gonna milk that as long as they can. And they have certainly made attempts at becoming more transparent, but they're nothing compared to what you might see from Circle for USDC. And, you know, it's it's the biggest stablecoin. So if somehow that couldn't touch Europe, I wouldn't be surprised if somehow the US latches onto that and kind of does it and and, you know, that's only good for Circle. At the end of the day, it's not really gonna be, helpful for anyone else.
Robert Swarthout:But, or anyone else.
Andres Sandate:Idea behind this that they're asking for what are the underlying holdings,
Robert Swarthout:like, to Maybe you have to be certain kinds of audits. I mean, because to to date, my understanding is Tethr has only done personal audits. They haven't done an outside audit, which personal audits don't count.
Andres Sandate:Right.
Robert Swarthout:Right. You're, like, saying that, trust me. I did the math myself. Sure. Sure.
Robert Swarthout:Yeah. So it's just, you know and maybe they evolve. I would I wouldn't be surprised if they at least attempt to, but I also can see, you know, they're down the Grand Canyon, I think is where they're based. So it's it's got that reputation around it, and, you know, the maybe I don't know if it's the g seven, but something at that level.
Andres Sandate:And they donated to a pack is my question. Correct. Because, I mean, honestly, like, when you start thinking about, like, Coinbase and, you know, Ripple and some of these guys that are larger and wanna be known as, you know, whether you like the companies or not, but they're they're at the forefront of the dialogue. Right? And so you gotta think after FTX with all the influence peddling that they were doing
Robert Swarthout:Mhmm.
Andres Sandate:That these legislators are on high alert around who's coming to talk to them. You know, because who wants to be caught taking money from someone who's the next Binance. Right? Correct. So so that that's the end, right, for, you know, for a politician.
Robert Swarthout:And
Andres Sandate:I think as you alluded to, like, our friend SBF, you know, he kinda got off scot free on that one charge around the political aspect of those charges the justice department brought. And I know your theory, if I not put words in your mouth, was around the notion that a lot of that was gonna boil down to who did you give money to? Mhmm. What how much money did they get? And it's like the justice department conveniently dropped all those charges so we didn't never get to find out.
Robert Swarthout:Yeah. You know, and not to jump way back in time and go through the weeds on that one, but I I think the last thing I had heard is around 80% of congress had received some money from him
Andres Sandate:at some level. Some money. Right?
Robert Swarthout:Yeah. Alright.
Andres Sandate:So 80%. No. No. Nobody there wanted to talk about that. Let's get rid of that charge.
Andres Sandate:Let's just move on. So
Robert Swarthout:And even the 20% that didn't didn't wanna piss off the other 80%. Right. Oh, yeah.
Andres Sandate:They're all members of the same clubs at the end of the day. So, yeah. So in any case, well, this will be one to watch because, obviously, Europe and Asia have been at the forefront of of adoption and being, you know, more progressive and more welcoming of crypto and this space. So be following Tether here over the next, 3 to 6 months to see if they, decide to play ball.
Robert Swarthout:Right. Because at the end of the day, a lot of liquidity within crypto goes back to USDT. It's not going back to euro or it's going back to the dollar. It's going back to USDT, the stable coin, which obviously in this case represents dollars, but it is, still a private, a private dollar. So
Andres Sandate:Right. And and one quick final question on this before we go to the state of RA Education to wrap up. If if a let's just say a company wanted to accept payment in the form of Stablecoin, can they choose to say, I want Tether stable coin or I want Circle stable coin? Sure. Makes sense?
Robert Swarthout:Yeah. Absolutely. I mean, it's no different than saying I want Bitcoin or Ethereum. Right. Yeah.
Andres Sandate:At the
Robert Swarthout:end of the day, it's, you know, admittedly the fund that I run. We pay bills with USDC. So
Andres Sandate:Oh, okay. Yeah. I'll see. I don't wanna lead the witness, but I was I was just curious when you get down to having competition amongst these stable coins, and if they're all pegged to the US dollar and they're all supposed to be Uber Uber safe and Uber Uber, right, liquid and but at the end of the day, when you, like, start to peel it back and pull the curtain back, like, clearly, the folks in Europe in terms of governance, Mika, compliance, there's something causing this. You know?
Andres Sandate:So
Robert Swarthout:Yeah. And you you could maybe squint with the whole Mika comment from him and be like, maybe because they're work well, they they certainly Europe and the EU are working on a, a their own CBDC. Right. So maybe this is certainly competitive at some sense.
Andres Sandate:Certainly buys them more time.
Robert Swarthout:Right. This may this may be a shot across the bow, of sorts. Or or maybe nothing at all, but, you certainly can
Andres Sandate:Well, I can only personally relate to when I lived in Italy, and when I arrived there, I we were on the lira in Italy, and it was in 2001, and you had all these old coins, and the exchange rate was so ridiculous. You know, you give a $100 US and get all all this money. Right? It's just, like, physically a lot to carry around, and stuff would cost, like, 50,000 lira. You're like, this is for a person in the US, like, going over there, 22 years old.
Andres Sandate:I don't even know what that means. And then they switched to the euro while it was there. And the, you know, the Italians, adopted it. Not all European countries did, but they did. And then it kinda just started to feel more like carrying US dollar currency.
Andres Sandate:You had the 100. You had the 20, the 5, the 1. They use coins. So it was interesting, kind of parallel between where things are in Europe now with stablecoins and their, adoption. Because in Europe, it's notoriously difficult to get pan European buy in and commitment.
Robert Swarthout:Oh, absolutely. Yep.
Andres Sandate:So Alright. The state of RIA Education. Education.
Robert Swarthout:So I had the, the the opportunity to be a fly on the wall for the last Monday Tuesday, at a conference that was, directed towards, primarily, RIAs that are curious about crypto, wanna add crypto into their practice, and that and that kind of thing. It was put on by, DACFP, which is the, I guess, the the body I mean, it is it's it's a private company, but, that it deals with education for financial advisors. They have a certification that can put another acronym at the end of your name if you if you Yeah. That type of situation. You know, I went with the, you know, in hindsight, I went with the with with the opinion that people that are coming to this conference certainly are gonna be at least relatively educated on crypto, but they wanna understand the mechanics of putting it into their business.
Robert Swarthout:That that that's what I thought I was walking into. Yeah. Probably wrong. Well, actually, I know I'm wrong at this point. Yeah.
Robert Swarthout:It was it was let me let me understand crypto. There was many people in the room that probably had never even thought about saying the word Ethereum. Like, they understood Bitcoin because vast majority of people have heard of Bitcoin, maybe not bought it. 50,000,000 people in America have done some version of crypto. So it's just like, I was surprised, you know, at the level of, I guess, or the lack thereof of education amongst advisers and good for them for being at a conference like that.
Robert Swarthout:Sure. And taking the time out of the day. But we are so far away from the masses. In some ways, the masses probably know more about crypto than their adviser. You probably can look at the math and say that probably works out that way.
Robert Swarthout:But it's a little disheartening knowing that those are the gatekeepers for people's investment advice, and this is how it works. And in a lot of ways, this is the same problem we have at congress. They're trying to write laws for something they don't understand, versus trying to make investment decisions based upon it. So it's a,
Andres Sandate:yeah, It's a Well, you raise a lot of yeah. You raise a lot of really good points, and we don't have a ton of time left. But I think one thing about RIAs that listeners need to understand is RIAs, if they're subject to SEC oversight or they're registered with the SEC or the state, wherever they're based, have a fiduciary obligation. Fiduciary basically boils down to do no harm. Right?
Andres Sandate:Correct. Yeah. A standard that is different than if that individual is not a fiduciary and in some cases maybe is registered, but they're under a regime called FINRA, which we've talked about.
Robert Swarthout:Yeah.
Andres Sandate:And they have more of a suitability. They still shouldn't do harm, but there's a different legal definition. And one of the things about that do no harm the point I'd leave you on is do no harm means you better understand what you're putting in your client's portfolio. So if they don't understand it, the chances they're gonna recommend it are pretty slim to none because then they're, you know, liable. So it'll be interesting to see how much education these folks decide, these RIAs decide to to pursue and embark on, because the client is gonna expect them to be up to speed.
Robert Swarthout:Absolutely. There was a, one of the panels that that happened. There was a guy there from a firm that said they've they've had it, the ability for clients to be able to buy it through an SMA, so separately managed account, for about a year now. And now they're starting to do ETFs that they're available. But he said that they were a new firm because they kind of reincorporated by, bringing a couple other firms together.
Robert Swarthout:And they had their 1st SCC, I guess, review after 12 months or something like that. And he said that the, it felt like more he was more he was doing more education than answering questions, because the SEC, there was, like, a a main auditor and 2, I guess, underlings that, were asking questions, and they were so curious more than, making sure he was doing it right because they did they almost didn't know the right questions to ask.
Andres Sandate:It's so it it's so it's so new and cutting edge. Right? So, yeah, these examiners is what they're called that are going in to do these annual it it could be an annual examination. These SEC, examinations aren't happening every year at every firm. They come in periodically.
Andres Sandate:But the things that they are honing in on, it you can look at the SEC's website when they do these examinations. The things they're looking at are private placements, alternatives. Crypto is certainly gonna be on that watch list. Yeah. So advisers have to know their stuff, not only about the strategies and the products, but they have to then have a process for why they select this issuer, how much are they putting in a portfolio.
Andres Sandate:Yep. But, yeah, I'm with you. Like, let's just start with a spelling test. Maybe, can they spell Ethereum? Right.
Andres Sandate:And and can they explain staking? There's some basic things, and I'm sure the DAC, FP is probably servicing a lot of these basic needs, which is needed in the industry. So Yeah. Hopefully, there's more of it. And I hope, you know, if you get to more of these, you come away next year feeling even more encouraged.
Andres Sandate:But certainly, Americans in trusting their wealth to advisors are expecting it.
Robert Swarthout:Yeah. Well, fingers crossed. So Yeah. Well, thanks for joining us on this episode of the Weekly Crypto Check-in. If you want to stay updated on future episodes, you can find us in any podcast player by searching Teton Crypto Capital or the weekly crypto check-in.
Robert Swarthout:Take care. Take care.