Ask Ric Edelman

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Ask Ric2023-08-17T12:41:08-04:00

Ask Ric

Ask Ric your questions about blockchain and digital assets. And read Ric’s answers to questions posed by other financial professionals.

I own BITQ , BITW & BITB. It has grow from 1% of my portfolio to 4.2%. Do you think it is time to take some off the table and pair it down to 1 – 2% ?
Steve | Ric responded, March 11, 2024

Rick, I own BITQ , BITW & BITB. It has grow from 1% of my portfolio to 4.2%. Do you think it is time to take some off the table and pair it down to 1 – 2% ? It is all in a Roth IRA. The rest of my portfolio is 50% stock mutual & 50% bond mutual funds in a Traditional IRA. I am 70 years old and have been in the market since I was 23 yrs. old. Love your podcast. You provide a valuable service.

There are 2 schools of thought on this. The first, which is more traditional and broadly accepted, is that you certainly should periodically rebalance your portfolio. By doing so, you insure that your portfolio allocation maintains your desired model. It also helps you sell assets at a profit and buy others at lower prices. In your case, for example, you’ve enjoyed massive gains in the crypto sleeve – hence it went from 1% of the portfolio to 4x as much. By rebalancing, you’d sell 3 pct points and bring the allocation back to your original 1% – which is what you wanted when you started. Taking profits is a great move, no? Since your investment is in an IRA, taxes on the gains are not an issue.

The other viewpoint – particular to crypto – is that rebalancing is less profitable. This camp argues that crypto is rising fast, with lots of room to grow. Why sell 75% of the position if that position is poised to sharply outperform all other positions? Let it ride, no? This argument is offset somewhat by those who recognize that crypto, despite its outperformance potential, often incurs big downturns – and by rebalancing when this happens, you keep selling high and buying low, ending up with more gains at lower risk than those who HODL bitcoin. Since your investment is in an IRA, taxes on the rebalance churn are not an issue.

So…up to you.

It seems you have advice and you comment on mainly things like bit coin. Why is this?
N | Ric responded, February 21, 2024

I use to hear you on the radio and if I remember correctly, you advised people about general financial questions. I really liked the show. And now , it seems you have advice and you comment on mainly things like bit coin. Why is this?

Actually, only about 20% of my podcasts pertain to crypto. If it seems like a lot more than that, then it’s probably because you’re not vey interested in the topic and therefore the commentaries are more noticeable to you.

I devote as much attention to it as I do because this is best wealth-building opportunity of the decade, and yet few people know much about it. Lots of education is needed, and that’s the role I serve. So instead of questioning why I cover it so much, a better approach is to question why you aren’t focusing more on what I’m actually saying about it – and why. This topic is really important.

But it’s not the only important topic. There are 4 others: longevity, retirement security, exponential technologies, and health & wellness. I cover all these extensively, and I don’t know anyone else who is. That’s a shame, for these are the topics that matter most to investors and advisors today

Wondering if you’ve seen the article in Wired that seemingly bust the myth if bitcoin’s anonymity?
Allen | Ric responded, February 9, 2024

The article doesn’t bust the myth; it merely describes the story that’s in the new book. The story itself is old – 10 years old. Although Satoshi and early bitcoiners believed that transactions are anonymous, it was quickly determined – as the book and article explain – that transactions are merely pseunonymous – meaning we know what was done, but not necessarily whodunit. This is how Silk Road was shut down back in 2013. It is also why Hamas told its supporters last year to stop sending them bitcoin, because the Israelis and other governments were able to track and seize the money. For a decade now, law enforcement has been clear that it loves bitcoin, because digital money leaves a digital footprint – something you don’t get with cash.

I wasn’t familiar with how the anon-link was quashed, and it’s a fun but geeky read. Not sure many will care about the how; they’ll care only (and rightly) that bitcoin is not anonymous. I haven’t seen anyone make that claim in many years.

Do you have anything that gives a good comparison of the alternatives within the bitcoin space?
Dorothy | Ric responded, February 9, 2024

I suggest you look at our Yellow Page. It features all the options available to you. You’d really benefit from our CBDA program, too – info on the website!

Why wasn’t this discussed as one of the things that the investor should take into consideration when comparing BITW and BITB?
William | Ric responded, February 5, 2024

I read your interview with Matt Hougan today (2/2/24) about BITW vs BITB. One of the things that was not mentioned is that with BITW you need to get a K-1 in order to fill out a 990-T, and that there can be a long wait time (after April 15) before the K-1 is available. Why wasn’t this discussed as one of the things that the investor should take into consideration when comparing BITW and BITB?

True. But our conversation was aimed at those who already own BITW, and they already know about the K-1 issue. Although I could have emphasized for them that moving to BITB eliminates the K-1, it doesn’t necessarily simplify tax preparation obligations. It’s too complex a topic for a podcast, unfortunately, tho I may try to tackle it in the future.

I was padi a sum by a friend that owed me a sum by Ethereum and mistakenly the funds were put into ETC (Classic) instead the ETH coin. Is ther anyone you suggest than can help retrieve the transfer back
Kalil | Ric responded, February 2, 2024

I am an avid listener to your show and have listened for years.
My question to you is that I was padi a sum by a friend that owed me a sum by Ethereum and mistakenly the funds were put into ETC (Classic) instead the ETH coin. Is ther anyone you suggest than can help retrieve the transfer back so it could be transferred into my ETH instead of the ETC. the coins were on TREZOR wallet.
I thank you in advance

Assuming the amount sent (in $) was correct, then you can simply sell the ETC and buy ETH. If the amount was incorrect, demand that the remainder be sent.

Does owning spot Bitcoin ETFs, purchased with US dollars, counter losses due to debasement of the U.S. dollar fiat currency?
Larry | Ric responded, February 2, 2024

That’s certainly an argument that many bitcoin promoters make. We all know that the US Dollar is debased annually – by intent, the Federal Reserve strives to cut the value of the dollar by 2% per year. But sometimes, it’s reduced by an even larger amount – as we’ve seen in the past several years. We call this inflation, referring to increased prices, because it’s more politically expedient. If the Fed and politicians called it what it really is – dollar erosion – the public wouldn’t tolerate it like they do (and if you think they don’t tolerate it, consider all the money in zero or low interest rate bank accounts).

The Fed is able to reduce the value of the dollar by simply printing more of them – by increasing the supply of dollars, you make each one worth a bit less. Now, 2% might not sound like much, but over decades it is devastating. That postage stamp that cost you four cents in 1960 costs 49 cents today – a 12.5x increase.

Bitcoin was created to solve this problem. A total of 21 million bitcoins will be produced (19mm so far), and the inability for the creation of more means there cannot be debasement. So while the value of a dollar goes down over time, the price of a bitcoin is expected to go up over time. And so far, that’s what’s happened. Will that continue? That’s for you to decide, but I’m in the camp that believes it will.

Fidelity has reached out and asked me if I would be interested in lending my BITW to them in exchange for an interest rate. Can you direct me to info I can study to better understand the risks associated with doing this?
Tim | Ric responded, February 2, 2024

I’m invested in crypto in ready for the events coming in the next few years. My strategy is simply buy and hold over that time.

All of my holdings are in BITW via my Fidelity investor account.

Fidelity has reached out and asked me if I would be interested in lending my BITW to them in exchange for an interest rate.

Meanwhile, fraud has caused me to be paranoid.

Can you direct me to info I can study to better understand the risks associated with doing this?

I’ve got piles of fidelity documents I need to read before I sign up for this program, but it’s heavy reading.

Securities lending is common. Many investors view it as an opportunity to increase their gains by several percentage points a year. Entirely up to you. Talk with the firm to fully understand the risks.

I’ve used a Bitcoin recurring buy service ( Swan) for about two years. Is it advisable to continue buying Bitcoin now?
Tim | Ric responded, January 25, 2024

Buying bitcoin on a regular basis via a dollar cost averaging strategy is an idea I like.

I’ve been looking at six Bitcoin ETFs and I see prices ranging from $22.01 – $40.25. If these are tied to the actual cost of Bitcoin then why is there such a huge price spread?
Daniel | Ric responded, January 25, 2024

Every firm sets its own initial price. It’s arbitrary – just like an IPO. It’s irrelevant and should be ignored. There’s no impact on their performance.

That said, I could envision on way the price: behavioral finance. If an investor favors the lowest price of the 11, or the highest, they might choose that ETF over the others. But that would merely affect the flows of the ETF, not the price of bitcoin. Again, I’d ignore this stat.

I own Bitcoin and ether via Venmo. What’s the difference
Joseph | Ric responded, January 25, 2024

It concerns me that you’d buy assets that you don’t understand. Please read my book, The Truth About Crypto, to get important education. It would take too much space here to answer the question – as well as provide warnings about the platform you used to buy them – and that’s why I wrote the book. Please read it, then let me know if you have further questions.

Why are you suggesting moving the assets to three or four different companies when they all are investing in the same thing BITCOIN?
Anthony | Ric responded, January 23, 2024

Hello Ric . After listening to your recent podcast I gained the knowledge of the high expense ratio GBTC charges for its Bitcoin etf. I’m going to , I move my assets with Grayscale to Bitwise as a result. My question is why are you suggesting moving the assets to three or four different companies when they all are investing in the same thing BITCOIN. How different can they possibly be? Thank you in advance for your advice. Sincerely, Dr. Anthony Pagano.

Download free our new Toolkit on these ETFs at – you’ll see the many differences. Different fees, custodians, spreads, cash holdings and more. I like to spread my investments to avoid overconcentration

What is the meaning of the word ‘spot’ within your discussion of the recently SEC-approved Bitcoin ETFs?
William | Ric responded, January 23, 2024

Ric: What is the meaning of the word ‘spot’ within your discussion of the recently SEC-approved Bitcoin ETFs? It seems to come and go at random in your podcast from 16-January. Is a spot Bitcoin ETF different from a Bitcoin ETF? Seemingly random use of the word ‘spot’ makes things less clear. I’m sure it’s not complicated and may be able to be ignored, but it seems worthy of some explanation. Perhaps it’s an illustration of how specialized fields can become opaque to “outsiders” through the use of abbreviated or unusual language which is nondescript .

Yeah, this is a silly situation, and you’re right to call it out.

We never refer to “spot” with any other ETF, so why these? Simple: the first bitcoin ETFs were bitcoin futures ETFs (which are bets on the future price of bitcoin). So when these came out, we needed to differentiate between them and the futures ETFs. “Spot” means “current”. So – the spot bitcoin ETFs buy bitcoin at the current price, and the bitcoin futures ETFs are based on the future (expected) price.

Is the preferred account structure to hold these ETFs would be in a Roth IRA?
Michael | Ric responded, January 23, 2024

Hi Ric. Have been following with interest your podcasts & updates about the SEC finally giving the approval for eleven separate Spot Bitcoin ETF offerings and trying to educate myself on the specific differences/similarities of the various selections as well as the overall tax implications to consider. Regarding the latter, from what I’ve gathered up to this point, it would seem to me that the preferred account structure to hold these ETFs would be in a Roth IRA due to the less burdensome tax implications & different treatment from more traditional investments, especially if one is planning on that bucket of assets being the last category to be tapped. As a reference, my wife & I are in our late sixties both with traditional and Roth IRA assets as well as a comfortable amount of non-qualified investments (with a portion of our qualified retirement assets under EFE mgmt). Would appreciate your input. Thank you.

A lot of people argue that IRAs, and Roths, are the best way to invest. That’s true for many assets, not just crypto. But your ability to do that is limited, and thus you might be forced to invest in taxable accounts. So talk to a tax advisor about it before proceeding.

Vanguard refused to offer Bitcoin ETFs. Are you surprised?
Michael | Ric responded, January 23, 2024
I own some bitcoin thru Coinbase. Does it pay to sell it and buy a bitcoin ETF?
Harvey | Ric responded, January 23, 2024

Hi Ric. OK, the bitcoin spot ETF is here! Great. So. I own some bitcoin thru Coinbase. Does it pay to sell it and buy a bitcoin ETF? I’m looking for long-term investment. Haven’t heard much about this. Thanks. Harvey

It’s up to you; there are pros and cons.

The ETF is more convenient, as it can be added to the rest of your portfolio at your brokerage account, like Schwab. Makes it easier to rebalance and dollar cost average.
Tax reporting is easier. Included in your 1099 from Schwab. Coinbase does not provide this
ETFs only trade on workdays. At Coinbase you can trade 24/7/365
You pay no fees to hold; the ETF has an annual fee. (most ETF fees are much lower than Coinbase’s trading commissions)

So, your call.

Why did BITW drop 30% over two days Jan 16 and 17 while Bitcoin did not experience similar movement?
Jay | Ric responded, January 23, 2024

I’ll be doing a podcast on this with Matt Hougan of Bitwise in a few weeks – stay tuned!

With the new spot etfs available are the older funds such as BITW at a disadvantage? I realize BITW has multiple cryptos but do you still recommend?
Michael | Ric responded, January 22, 2024

Ric, with the new spot etfs available are the older funds such as BITW at a disadvantage? I believe they were “futures?” based and maybe the new ones are more efficient. I realize BITW has multiple cryptos but do you still recommend?

No, I don’t think BITW is disadvantaged. It’s a more diversified investment, and thus has attraction for many investors. And its biggest holding is bitcoin. The fund does not buy futures; other funds do. I am continuing to hold my BITW. And we’ll have a podcast devoted to this topic in a couple of weeks. Stay tuned!

Ric, have you seen these articles?
Daniel | Ric responded, January 22, 2024

Ric, Have you seen these articles?

I’m aware of John’s opinion piece. It reflects his bias against crypto. My viewpoint published this week takes a very different view. It’s not based on liking or disliking an asset; it’s about investor choice.

You are very bullish on Bitcoin. Why do you think Bitcoin will grow?
Viral | Ric responded, January 18, 2024

You are very bullish on Bitcoin. Why do you think Bitcoin will grow? I understand huge growth in Blockchain technology but how do you translate that to Bitcoin price increase? What is the relation?

3 in 4 advisors say they will allocate to the new bitcoin ETFs. An average allocation translates into $150 billion in flows. Since the supply is fixed, this can be expected to translate to substantial increases in price.

While my assets are in use in DeFi they could not be in a “cold” wallet?
John | Ric responded, January 18, 2024

0.0045 ETH in a “Trust” wallet. The course taught the value of a cold wallet to hold assets “off-chain.” But I understand my funds listed above are “hot.”

My goal is to do DeFi lending and/or a liquidity pool.
Do I have it correct that while my assets are in use in DeFi they could not be in a “cold” wallet?

Would you recommend a wallet(s) better suited for DeFi ? (e.g., Lex mentioned MetaMask)

Correct. And MetaMask is the go-to for many re DeFi. This is not advice.

What does “spot” bitcoin refer to, and how are they different than the numerous digital asset ETFs cited in your book?
John | Ric responded, January 18, 2024

Hi Ric, I loved your book “… About Crypto” and enrolled in your Investors Track course yesterday.
What does “spot” bitcoin refer to, and how are the “spot bitcoin” ETFs approved Jan. 10, 2024 different than the numerous digital asset ETFs cited in your book and the DACFP website?

”Spot” means “the price right now” – as opposed to bitcoin futures ETFs, which are investments based on the future prices. And these new spot bitcoin ETFs differ from crypto ETFs in that they all buy bitcoin; the others buy stocks of companies engaged in the crypto industry.

Explain the difference between BITW and BITB
Austin | Ric responded, January 18, 2024

We’ll be doing a podcast on exactly this next week – stay tuned!

Is this BR ETF approved & available at Wells Fargo?
Heath | Ric responded, January 16, 2024

The media is reporting that the ETFs are available at WF, but with limitations.

With Mount Cox did they actually just move their Ethereum over to Mount Gox’s block chain and now you can keep control of your coin?
Teresa | Ric responded, January 16, 2024

I’m a little confused about Defi. Laura Shin explained that you could stake let’s say Ethereum and keep control by using your own wallet and yet Mount Gox people never will reimbursed or never received back their money in each instance it seems to me that they are pooling their money which means you’re putting it over or giving it over to some black chain to provide liquidity. has that changed? I guess what I’m trying to say is with Mount Cox did they actually just move their Ethereum or whatever other token or coin over to Mount Gox’s block chain and now you can keep control of your coin and keep it in your cold wallet, and still provide liquidity or stake it? I hope I’m making some kind of sense.

Not sure what Laura said vs what you heard, so let’s start over.

When you stake coins, you are posting them as collateral. If the node goes offline or tries to validate faulty data, you could lose your coins. And if you join a staking pool, they’ll take a cut of your staking profits. Also, often when staking, you’ll be required to lock your coins for a period of time – reducing your liquidity.

Mt. Gox was a scam, and there’s no point in trying to explain what happened in the context of legitimate business activities. Set that aside. One lesson, though: do your best to select a valid crypto custodian.

Will Matt (Hougan) follow his promise: converting the derivations option value to its net asset values?
Octavio | Ric responded, January 16, 2024


Question for Matt Hogan, CEO of BITW. Matt told us in his interview with Ric before SEC approved its spot Bitcoin ETF application, BITW will convert its Bitcoins options derivatives to its BITW net asset value. Its net asset values were about 37 percent. Will Matt follow his promise: converting the derivations option value to its net asset values?

This is not a promise you need to rely on Bitwise to fulfill. That’s because it’s an inherent aspect of how ETFs operate. BITW is a Grantor Trust, and these trade OTC; buyers and sellers set the price, and consequently the price could differ from the Net Asset Value of the fund. That is why the price is 37% less at the moment than the NAV. But when (if) the fund converts to ETF status, that discount will disappear – because all ETFs trade at NAV. The problem goes away – as we just saw with GBTC. It had a 50% discount last summer, but when it converted into an ETF last Thursday, that discount was gone.

Maybe you can share my e-mail on this subject to Matt Hogan who I respect but would appreciate sharing BITW is a grantor trust and its assets will be converted to its NAV instead of the discounted value after Thursday, 1-11-24, SEC approved its bitcoin spot ETF application.

There is no benefit to asking Bitwise. No answer they give you will be anything you can rely on legally. Besides, neither I nor they believe that BITW will ever become an ETF; it contains 8 coins that the SEC says it will not allow an ETF to hold.

That said, are you saying BITW cannot owned Bitcoins its owns after the SEC approval of its spot ETF at those Bitcoins NAV and the other 9 not yet approved digital assets at their option values which continue to be valued at buyer and seller created. Are you saying BITW cannot account for them like what I envision after SEC approval of its bitcoin ETF? To me, I can see the other 9 which the SEC has not yet approved will stay at their discounted prices bit Bitcoins which . SEC has approved will be stated or valued at its NAV. Are you saying Matt will not be able to do what I think possible for BITW’S digital assets?

If you’re referring to the fact that Grantor Trusts typically trade are premiums or discounts to NAV, then yes you are correct that is a material fact that investors need to know about. I have worked hard to provide that information, and have an article on it on my website. I know Bitwise discloses this as well.

Is an investor permitted to buy and hold a Bitcoin ETF in an IRA account?
Art | Ric responded, January 12, 2024


When investing in a spot bitcoin ETF outside of a retirement account should i expect adverse tax consequences on an annual basis even if i do not sell?
Steve | Ric responded, January 12, 2024

When investing in a spot bitcoin ETF outside of a retirement account should i expect adverse tax consequences on an annual basis even if i do not sell? Follow-up question: of the 11 approved spot bitcoin ETF’s which is the most tax friendly?

ETFs are ordinarily highly tax efficient; they rarely incur annual capital gains distributions, unlike mutual funds. However, the SEC has imposed a restriction on the spot bitcoin ETFs – cash settlement vs in-kind – and this could very well result in annual tax liabilities for all shareholders regardless of personal trading. Some believe the SEC will ease up on this requirement; we’ll see how the year goes. I don’t think any of the ETFs will prove to be more tax-efficient than the others, but time will tell.

Does BITW continue to be traded OTC? I noticed bitwise came out with their BITB, what happens to BITW in this?
Allen | Ric responded, January 12, 2024

I noticed that yesterday the SEC approved several spot Bitcoin ETF and this is great. I’m wondering, I’ve been holding a lot in BITW. Does BITW continue to be traded OTC? I noticed bitwise came out with their BITB, what happens to BITW in this?

BITW is unaffected. It won’t become an ETF in the foreseeable future. But the new ETFs are likely to generate higher prices for bitcoin over time, and BITW will benefit, as more than half of it is BTC. And the other coins likely will rise, too, as this situation is rising-tide scenario. I have no plans to sell my BITW.

What are your thoughts on the Robinhood platform for Bitcoin (or any other crypto) purchases?
Brian | Ric responded, January 12, 2024

Hi Ric! Love the podcast and your book, The Truth About Crypto! Quick question:
I’ve been using Robinhood for several years now to purchase stocks and Bitcoin. I started using Robinhood for its ease of use and its ability to purchase partial shares. What are your thoughts on the Robinhood platform for Bitcoin (or any other crypto) purchases? Also, is Robinhood considered a safe option to invest in crypto? Thanks for sharing your knowledge with all of us!

Robinhood is increasingly regarded favorably, but I do not follow it closely enough to offer an actionable comment.

I own BITW thru Schwab in a rollover IRA account (one of a number of assets) and looking to hold for many years. My question is now that the Bitcoin Spot ETF has finally been approved, what does this mean for BITW? Will it become an ETF now? If so, does that mean I can expect a much lower expense ratio?
Josh | Ric responded, January 12, 2024

No, it won’t become an ETF in the foreseeable future. But the new ETFs are likely to generate higher prices for bitcoin over time, and BITW will benefit, as more than half of it is BTC. And the other coins likely will rise, too, as this situation is rising-tide scenario. I have no plans to sell my BITW.

I am not engaging in any US-banned cryptos, but I would like to get better educated on this topic
Steve | Ric responded, January 7, 2024

I am not engaging in any US-banned cryptos, but I would like to get better educated on this topic so that I can:
(A) study the laws myself to understand what is going on here and
(B) if I feel changes should be made, contact my legislators and let them know my concerns.
(C) find that I actually like the laws!

If you have already published an article, blog, or podcast on WHICH laws specifically are being broken here, will you please send them to me so I can be better informed?

The primary laws that are germane here are:
Securities Act of 1933
Securities Exchange Act of 1934
Investment Company Act of 1940
Investment Advisers Act of 1940
Sarbanes-Oxley Act of 2002
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

You’ll need a law degree….

Is owning funds such as BITW and GBTC the same as owning bitcoin and ethereum?
Tim | Ric responded, January 3, 2024

No. Both are securities, investments that own digital assets. So they are a good proxy but it’s not “the same.” BITW owns 10 coins; bitcoin and ethereum are about 80% of the total fund. GBTC owns bitcoin but its price currently trades at a discount (a problem that will go away when GBTC converts into an ETF, pending SEC approval).

Embarrassingly stupid question: how is what I already invested in (GBTC) different from what you discussed on your podcast today (those ETFs pending approval, imminently, by SEC)?
Mazy | Ric responded, January 3, 2024

Not stupid at all – this situation is rather confusing.

Grayscale has asked the SEC for permission to convert GBTC into an ETF. Assuming the SEC approves (the court last summer ordered the SEC to do so, which is what led us to today’s situation), then your investment will become an ETF. And in the process, Grayscale will lower the fee. And the conversion will not be a taxable event. So, all good!

You’re 100% correct that the E&O policy I have will cover something such as a spot bitcoin ETF. I have prospects who receive large cryptocurrency grants (i.e., they work for a L1 crypto foundation) and they’re looking to engage with a financial planner to help diversify and manage their new wealth. The problem is that my E&O carrier is non-commital with respect to any comment I make around the diversification of their direct crypto positions (even if it’s basic advice such as “diversification is typically a prudent approach”). Any insight into how others have gone about this? I have dug up some information from old forum posts, but I’m not quite seeing what the latest and greatest approach is around this.
Marcel | Ric responded, January 3, 2024

There’s nothing yet that I’m aware of. But I think 2024 could be the breakout year, as institutionalization of crypto further develops.

Many E&O policies for financial advisors either specifically exclude direct crypto coverage or generally are very expensive to get E&O coverage on. Does the DACFP team have any insights to share on this? I think it’s important for advisors to guide clients on this nascent asset class, but many will hesitate to do so, given the risk of lawsuit. Would love to understand how advisors can start to incorporate crypto into their practices.
Marcel | Ric responded, January 3, 2024

The dilemma of finding E&O coverage for crypto activities has kept many firms and advisors away from this asset class. But the new spot bitcoin ETFs solve that problem – because they are simply ETFs. The fact that they’re investing in crypto is secondary. Therefore, ordinary E&O policies cover these, just like all other ETFs. Check with your carrier, but this looks like problem-solved. It’s another reason so many advisors will use these new ETFs. They want to allocate to bitcoin, and now they can, with their activities covered like all their other activities.

Are people in the US who use VPN to interact with these non-US protocols breaking any laws? Or, are US citizens “okay” to interact with these coins/protocols from a legal standpoint, but just “do so at their own financial risk” (like, the US isn’t going to help them if they lose their money…which, the US isn’t doing much to help US crypto investors anyway!
Steve | Ric responded, January 2, 2024

I have a question for you:

  • One coin I bought switched blockchains and is no longer accessible to US residents
  • Another coin I bought on Uniswap, but their main website (which is where you can stake it—which is what I want to do with it while I HODL it) is only available to non-US persons.

In the Defi world, most people say “just use VPN” [to get around this non-US limitation] and think nothing of it. I read that most of these protocols do this because they don’t want to deal with US regulators and this gives them immunity / “covers their bases.”

My question is: Are people in the US who use VPN to interact with these non-US protocols breaking any laws? Or, are US citizens “okay” to interact with these coins/protocols from a legal standpoint, but just “do so at their own financial risk” (like, the US isn’t going to help them if they lose their money…which, the US isn’t doing much to help US crypto investors anyway!!! … LOL, sigh).

I just don’t want to be going to jail or paying some crazy fine because I used a VPN to interact with “Non-US” protocols. I am okay taking the financial liability, I just don’t want to incur a legal liability from the US government.


Stop asking me questions you already know the answers to. I’m too busy to give people the answers they want to hear, when they know those answers are the wrong answers.

Of course you’d be breaking the law. And shame on those who are encouraging you to do it. Those crypto bros are everything that’s wrong with crypto – and they’re the ones giving Gary Gensler and Elizabeth Warren and Jamie Dimon and Warren Buffet all the ammunition they need to call crypto nothing more than a tool used by criminals.

In case I really need to say it: Do not break any laws. Do not engage in tactics that attempt to dodge any flaws. And STOP ASKING ME FOR PERMISSION TO DO SO.

Ric…….where can I purchase fractional shares of Bitcoin? I have searched online but can’t find a definitive answer. Schwab doesn’t offer.
Richard | Ric responded, January 2, 2024

Pretty much everyone buys fractions of bitcoin. That’s because a single bitcoin costs about $42,000 (as I write this). Few people can afford that. So although everyone talks about “buying bitcoin” very few (other than wealthy investors) actually do. What they are actually doing is buying a piece (fraction) of a bitcoin. These are called Satoshis, named after bitcoin’s inventor, Satoshi Nakamoto. Think of these as the difference between a dollar and a penny. A penny is one-hundredth of a dollar; it takes 100 pennies to equal a dollar. In the case of bitcoin, a single satoshi is one-hundred-millionth of a bitcoin; it takes 100 million Satoshis to equal one bitcoin. So when you buy $1 worth of bitcoin, you’re getting a tiny tiny tiny fraction of a bitcoin. And as you buy more Satoshis, you eventually accumulate enough to equal one bitcoin. This is why enthusiasts like to say they are “stacking Sats!” – they are accumulating Satoshis!

So, every crypto exchange, like Coinbase, and every bitcoin fund, actually is letting their investors obtain Satoshis. Simple.

By far the most useful case for crypto is nefarious activity. It’s the medium of exchange on the dark web, makes money laundering easier, is ideal for funding terrorism, romance scams, pump and dump schemes great for cyber criminals involved in drug trafficking, for example Silk Road and Alphabay, as well as child porn and murder for hire. It’s also an excellent way to hide money from the government. What’s the good use case again? Why should it be legal when it’s really just greater? Fool theory of fraud. Why should humans invest in things that make it easier for people to do what most humans agree is immoral?
Kevin | Ric responded, December 26, 2023

I’ve been involved in crypto since 2012, and I’ve dealt with folks like you since the beginning. To be honest, I’m getting pretty tired of the diatribes and hand-wringing, bolstered by vague accusations and wild claims. So, here’s my reply to everything you wrote: Prove It. You’ve made 12 accusations. Show me the proof. Give me the evidence. Don’t just recite what you’ve heard, and don’t just repeat the claims of others who reflect your viewpoint – so common an error it even has a name (confirmation bias). Instead, show me the data. I’m willing to listen. If you can demonstrate to me that your facts are correct, that crypto is being used by people to engage in murder for hire (seriously!?!?) then I’d like to see the facts. And if you can’t, then please consider that maybe just maybe your views are incorrect and you ought to consider adopting a different point of view.

I wish the best for Ric Edelman and the stock market. However, I’m not going to follow the bitcoin or Shitcoin cult. Really. Did he say that the best use case for the cryptocurrency cult is to just play video games and learn from Gary Gensler, Jamie Dimon and Warren Buffett on Bitcoin?
Kevin | Ric responded, December 26, 2023

I’ve learned long ago to largely ignore what people say and focus instead on what they do. Gary Gensler has approved bitcoin futures ETFs and other crypto ETFs, and is about to approve spot bitcoin EFTS; Jamie Dimon’s firm, JP Morgan, settles $1B in cross-border transactions per day using blockchain technology – his own JMPCoin – and his firm’s Onxy platform tokenizes assets for its institutional clients, among many other crypto-related activities; Charlie (RIP) and Warren invested $500M into Nubank, Brazil’s largest digital bank with 67 million customers – and more than 2mm of them have purchased such digital assets as bitcoin, Ethereum, Polygon and Uniswap via their bank accounts. I’m not sure I’ve ever compared crypto to cars, but then again, is everyone behind the wheel in a cult?

I have GBTC in my Roth and IRA . Does this ETF have any NFT’s? If it does I will contact an advisor.
Michael | Ric responded, December 13, 2023

Nope, you’re good. (Though talking to an advisor is always a good idea.)

I have been listening to your podcast and radio shows for the last several years and learnt a lot, so thank you for that. Now, question on GBTC. I would like to get exposure to bitcoin by bying GBTC as you recommended in your latest daily podcast. I want to allocate atleast 2% of my liquid cash asset to this category. How do I do that? Can you please tell me where to buy this Trust fund and how to buy this? Can I also allocate 1% of my 401k to this fund? Thanks in advance for your time and advice
Sundar | Ric responded, December 11, 2023

Glad you’re finding value in my podcast!

You can buy GBTC in any brokerage account, such as at Schwab. If your 401(k) plan has a self-directed option, you can choose that about buy GBTC there, too. Note: I’m telling you “how” not giving advice as to whether you “should.” For the latter, you should consult a financial advisor, and I can refer you to one if you like.

While waiting for Bitcoin EFTs to receive approval, any reason why I should not purchase more BITW which is ~70% Bitcoin? What are the differences between the pending Bitcoin ETFs and the BITW Equity fund besides BITW only being 70% Bitcoin?
Ken | Ric responded, December 6, 2023

I can think of lots of reasons not to buy, and just as many to buy.


  • It’s BTC only
  • There’s a discount to the NAV
  • There’s an annual expense ratio associated with owning shares
  • Crypto is volatile


  • It’s more diversified than a BTC ETF, which can help reduce risk
  • The discount to NAV lets you buy BTC for less than its current price
  • The expense ratio is less than some other funds
  • Bitwise handles custody for you; no need to create/manage your own wallet
  • Volatility can work to your advantage via dollar cost averaging, rebalancing and tax loss harvesting

You can probably add to both lists.

What protects crypto investors from panic selling, similar to a “run on the crypto bank” an a “run on the crypto exchange”? SIPC, NCUA, FDIC (and possibly FSLIC ) insure deposits for at least $250,000 to safeguard investor funds from ‘panic selling’. What protects investors of crypto assets from similar events among crypto institutions headquartered in the USA?
Linda | Ric responded, November 28, 2023

Nothing protects anyone from panic selling, leading to “runs” and massive declines in prices or, in the case of insured bank deposits, liquidity. Sure, bank accounts of $250,000 or less are insured by FDIC – but that doesn’t help you if the bank is closed and the ATM is empty.

SIPC does not protect against investment losses; it only replaces shares lost if the custodian collapses; the shares themselves might still be worthless.

No one should ever invest in anything because of so-called “government insurance.” If you are unwilling to risk loss of your investment, don’t invest. Period.

For those who choose to hold their own crypto wallet, what protects them from “viruses in the wild” or “zero-day viruses” (the portion of the lifespan of a computer virus, from the time it is released upon a population, until the time a protective software patch for it is released)? The response given to Deicy on (10/30/23) seems to suggest that the ‘time a virus is in the wild’ is very brief, but I think that period of time still damages a lot of victims, while we’re waiting for the software patch! The Solar Winds Hack (in DEC2020) penetrated the Dept. of Treasury, at least 8 other Federal Agencies, and at least 100 private entities, including Nvidia, VmWare, and Microsoft. I don’t think they’re viewing such breaches as inconsequential, and neither should we.
Linda | Ric responded, November 28, 2023

If yours is a cold wallet, you are immune to cyber viruses – because your wallet, by definition, is not connected to the internet. But eventually, you will connect that cold wallet to the internet (to sell or transfer your coins), and at that point, your cold wallet becomes a hot wallet – and subject to the risks you describe. There’s no way to avoid this risk, but I’d consider it to be extremely low – so low that you never hear about incidents such as those you describe. I think you’re catastrophosizing – scaring yourself by focusing on unlikely events instead of focusing on more realistic events (such as bitcoin quintupling in price). You might as well suffer insomnia by worrying about asteroids hitting Earth.

I took a loan from my TSP for $11,000 in 02/2023 and bought BITW, and this investment has grown in value to over $28,000. My TSP loan balance is now $9600. Should I sell $9600 of BITW and pay off my TSP loan? Or should I wait to sell enough of my BITW account to pay off my TSP loan, until after April 2024 when the Bitcoin halving may take place?
Joseph | Ric responded, November 28, 2023

You didn’t ask me about your strategy of borrowing from your retirement account to invest in crypto, so I can’t weigh in on what you ought to do now.

BTW and FWIW, IMHO, I would never recommend borrowing against retirement savings to invest. If you’re wrong, not only do you lose money on the investment, you incur interest expenses on the loan – and because the money came from your retirement plan, you risk losing your future financial security. Three reasons not to do what you did – which I would have said had you asked before you did it.

Just wondered about your thoughts on whether investors would move their money out of BITW and into Black Rock or other ETFs when they become approved? Wondering if that would put downward pressure on the value of BITW
Allen | Ric responded, November 28, 2023

I doubt there will be much if any selling, and even if there was, it wouldn’t be expected to alter the price of the fund.

People who bought BITW did so because they wanted a diversified portfolio of crypto. If they only wanted to own bitcoin, they could have bought GBTC or OBTC. So the new bitcoin ETFs won’t impress them – they’d have to go from owning 10 coins to owning just one. Why would any of them want to do that (and incur tax liability along the way)?

Even if large numbers of BITW owners did that, it wouldn’t likely affect the fund’s NAV. That’s because there’d be too few – relative to the crypto universe – to move the price. And since half the fund is in bitcoin in the first place, they’d merely be selling BTC from one fund to buy it in another – a zero-effect trade.

I’m going to continue holding my BITW, with no worries.

When the Bitcoin ETFs are finally approved by the SEC, will the Bitcoin ETF be available for Traditional and ROTH IRAs? Currently Bitcoin cannot be held in an IRA.
Todd | Ric responded, November 27, 2023

Yes, Todd. All ETFs are eligible for investment inside any type of IRA as as self-directed 401(k) accounts (which are available in many employer plans). You’re buying shares of an ETF, and ETFs are securities, and securities are permitted inside retirement accounts. You’re not buying bitcoin when you buy a spot bitcoin ETF. Same when you buy stock ETFs – you’re not buying shares of stock; you’re buying shares of the ETF, which is buying the stocks or the bonds or the real estate or the gold or the bitcoin or whatever. Simple, easy. This is why there’s going to be such a large asset flow into these ETFs – most people have most of their money in IRA and while they can’t easily use that money to buy bitcoin, they can use it to buy these ETFs.

Note that I said “easily.” There are actually qualified crypto IRA custodians – my favorite is Choice, where I have accounts and am an investor – that do let you buy bitcoin, Ethereum and dozens of other digital assets (as well as cows and horses, but that’s another story). Most people will start with these new spot bitcoin ETFs but they’ll soon realize that all they’re getting is bitcoin. If you want more diversification, you’ll want to look at Choice.

I’m an artist. Can I find someone in Washington DC to teach me all I need to know about NFTs? What do you think is the most lucrative way to sell my art? From: Craig Looking for a DC-based expert is silly, since you’re seeking to do something cutting edge on the internet. You should be willing to work with someone remotely, without limiting yourself to a geographic area.
Anonymous | Ric responded, November 18, 2023

I’ve asked my colleague and CBDA faculty member Jacki Roach, who’s a leading expert in NFTs for her thoughts on this. She notes that online learning platforms (Coursera, Udemy, LinkedIn Learning) have classes about NFT art (creating collections, the minting process, listing on an NFT marketplace such as OpenSea or Rarible, and business strategies for marketing NFTs.

2021 and 2022 saw a boom in NFT art activity, but the crypto winter has pretty much killed the NFT art market, at least for now. Jacki says there is no lucrative way to sell NFT art at this time. Successful artists are partnering with each other, pitching their work on Twitter Spaces, and building a community of followers on social platforms like Discord.

OpenSea, the most well-known NFT marketplace, has tutorials and resources that explains minting and creating a collection. This is a good place to start. Platforms like cater to the fine art sector and can also be helpful in gaining knowledge. Now might be the right time to start, since prices have bottomed out. The contrarian strategy says it’s best to engage when no one else wants to.

Over the past year, we have seen the collapse (and trial) of FTX, as well as of the market and prices for NFTs and perhaps cybercurrencies themselves. Possibly, however, I haven’t read recently of blockchain-enabled purchases of artwork and other objects and services and so assume that the field is moribund, so I turn to you. Are cybercurrencies in regular use in art transactions? Are NFTs still sought-after, with prices that suggest an investment potential for them? Is the blockchain alive and kicking?
Anonymous | Ric responded, November 3, 2023

The NFT market for digital artwork – such as Bored Apes, Crypto Kitties and NBA Top Shots – has collapsed. It seems these were fads, similar to Beanie Babies. It remains to be seen whether prices for these NFTs will recover.

The price collapse of that market coincided with the crash of bitcoin, Ethereum and other digital assets. However, in the past year, prices for these coins has risen sharply – bitcoin is up 100% so far this year – while prices for most NFTs remains at or near lows. The common viewpoint is that attention is focused on the commercial uses for BTC, ETH and other coins – uses that hyped NFT art lack. There is also an increasing engagement in crypto by institutional investors and governments, and they are focused on primarily on BTC, ETH and stablecoins. This trend is expected to continue.

Meanwhile, there is a new level of interest in NFTs, but of a more commercial nature than the creation and sale of digital art. This is now referred to as the RWA – the tokenization of Real World Assets. Starbucks now distributes rewards to its Loyalty Program members via NFTs; Breitling gives all its watches an NFT so owners can track the provenance of its timepieces; The Norwegian Seafood Assn and Italy’s Parmigiano Reggiano are encoding their products with NFTs to combat forgeries, WalMart is encouraging lettuce growers to track their crops with blockchain technology to reduce the risks of exposure to salmonella, and the state of West Virginia is recording and distributing automobile titles as NFTs, a practice being adopted by other states. These are just a few examples of the uses of NFTs – demonstrating that this technology is alive and well and rapidly growing.

One of the biggest growth areas for NFTs in securities. Franklin Templeton has released the first-ever tokenized money market fund, and release of ETF shares as NFTs is under development by them and others. It’s projected that NFTs will begin to replace mutual fund and ETF shares this decade – a massive achievement for a $30 trillion industry, with huge implications for the financial services industry.

Given all this, will none of the Bored Ape NFTs ever again enjoy investor interest? Hard to believe, but we’ll see.

Do you think that week have a possible perfect storm in the horizon for Bitcoin, specifically in March and April 2024 when the SEC could possibly give the go ahead for Blackrock’s ETF for BITCOIN, and the four year anniversary of halving of BITCOIN ?
Anthony | Ric responded, September 13, 2023

Perfect storm? I think you mean the opposite – stars aligned. Yes, there are lots of great developments underway. You mention only two: the halving in 2024, and the spot bitcoin ETFs (which might come to market any day, not necessarily in 2024). I’d add: new legislation on stablecoins (and PayPal’s introduction of one), Ripple’s victory in its lawsuit against the SEC, the likelihood that the SEC will also lose its case agbainst Grayscale, Coinbase winning approval to trade futures…the list goes on and on. I did a podcast on the ETF situation last week and am releasing a white paper on it on Monday, too.

Based on what Per Peter Zeihan (Geopolitical Strategist) says here (click to open), is Bitcoin dead?
Bill K | Ric responded, September 13, 2023

The following by Peter Zeihan on August 31, 2023:
“With all the buzz around central banks starting digital currencies and one of these entities controlling all transactions, I think it’s about time I burst everyone’s bubble…

Fintech has blown up because it slims down the traditional money transfer process and removes some of the associated fees, meaning you can transfer money faster and cheaper. However, the Federal Reserve will wipe out most fintech startups within the next five years with their service – FedNow.

FedNow allows for the instantaneous clearing of funds when transferred using the Fed as the intermediary. Oh, and it’s functionally free. Put the hype for this or that financial product – whether crypto or otherwise – to the side for a minute and dwell on how said systems might compete with free, immediate, and from the source. Queue the gnashing of teeth.

What we’re seeing in China is different from this. They’ve married digital currency to social currency scores, making Orwell look alright. This could never happen in the US, but if China continues down this road, its entire financial space will be under the government’s thumb. Any dynamism left in the Chinese economy will be stamped out fairly quickly if this continues.”

I’m not familiar with that gentleman, and haven’t read/heard his content. I’m struggling to make sense of the clip you provided. I do agree that FedNow is an important project that will have lots of implications, but I fail to see how that has anything to do with bitcoin. Bitcoin is an asset, like stocks, gold and real estate. All of these are stores of value; people buy they because they believe that they will retain (and increase in) value. The Fed prints money, like cash. Cash and stores of value peacefully coexist; in fact, they support each other.

Many people continue to believe that bitcoin’s sole purpose is a replacement for money. It’s not. It’s a store of value, alongside all other stores of value. Saying bitcoin is dead because of FedNow suggests a basic misunderstanding of crypto.

Do I run into regulatory compliance issues (SEC or State) running a newspaper ad; if bitcoin is specifically listed along with stocks, bonds, etc. as an investable asset available?
Jim Krebec, CFP®, President, CIC Investment Consultants | Ric Responded December 30, 2021

If you’re simply listing asset classes such as stocks and bonds, I see no issue with also mentioning digital assets (I wouldn’t mention bitcoin specifically) – just as I’d see no issue with mentioning other asset classes, such as real estate or gold. I’d have my compliance department approve any ad before using it, to make sure the proper disclosures are present; you want to be clear if you’re offering an asset or a security investing in that asset (a REIT vs real estate, or gold ETF vs gold, or GBTC vs bitcoin). And be sure you’re not violating your firm’s “selling away” rules.

Do you have an opinion on the impact of future approvals of Bitcoin ETF’s impact on GBTC, BITW, OBTC , etc.?
Lars Larsen, ChFC®, President, Heritage Financial North | Ric responded December 30, 2021

OTC products will likely be of little interest to investors after ETFs become available. That’s why all the OTC sponsors have committed to converting their OTC securities to ETFs. Makes sense. And that offers investors an arbitrage play: GBTC, for example, is trading at a discount. If it converts to an ETF, theoretically that discount would vanish – giving GBTC owners a nice little bump! Of course, this depends on the conversion occurring.

I have several clients that would like to gift BTC to their donor advised fund. Fidelity Charitable is where most client DAF’s are held. Fidelity is fine accepting BTC but requires a third party appraisal that costs around $600. This is crazy to me for asset that is liquid 24/7. I know it’s treated as property. Do you know away around this or do you have a recommendation for an organization that can do the appraisal for a reasonable fee?
Trey Barnes, Sr. Wealth Advisor, Mariner Wealth Advisors | Ric Responded December 16, 2021

The appraisal is required by the IRS, not Fidelity. This is true for any charitable donation of non-cash, non-securities of $5,000 or more. Fidelity gives you a confirmation showing the date they receive your crypto and the selling price, but the IRS won’t accept that as a legal appraisal. You have to hire an appraiser, and Fidelity can refer you to such folks (and look at our Yellow Pages for a list of appraisers – we’re adding to this list often.) Yes, an annoying aspect of making donations of crypto. I think you can get it done for less than $600.

I’ve had a hard time adding a beneficiary to my digital assets account at Coinbase. Their customer service messaging app is not easy to navigate, and I can’t get anyone in customer service to answer the phone. I know I can move the assets to a different platform. Who offers the best customer service? I’m also considering a cold wallet. Any suggestions?
Timothy Reid Bolinger, Financial Advisor, Fisher Wealth Management | Ric Responded November 18, 2021

I’m not aware that you can name a beneficiary to accounts at Coinbase. This is not uncommon, as many institutions don’t allow you to name beneficiaries on taxable accounts. Traditionally, beneficiary designations are set for retirement accounts, wills & trusts, and annuities. So, if your financial institution doesn’t allow you to name a beneficiary on the account, you’ll have to do so in your will or trust (and make sure the relevant document references or applies to the account).

Many digital asset exchanges do not permit trust registrations, or even joint registrations with spouses; they often permit only registrations featuring the name of a sole individual. This is archaic, reflecting the fact that they are not aware of, or don’t care about, the estate planning and tax planning aspects of asset ownership. This will improve over time as they mature – and as they continue to engage with the financial services industry. For now, it remains cumbersome at many exchanges. No one in the field is winning any awards for customer service yet. Soon, though, as competition grows, pricing and service will improve. The analogy: when Model T cars first got produced, there weren’t any paved roads. Just dirt trails created by horses pulling buggies. Over time, those trails were paved, and later, highways built. Service, performance and reliability all improved exponentially. In crypto, we’re still in the horse-and-buggy days. It’s a hassle, but you’re being rewarded by having profit potential that future participants might not enjoy.

Your notion of using a cold wallet won’t help you, by the way. There’s no registration at all with such a device, let alone opportunity to name a beneficiary. If you put your digital assets onto a flash drive, make sure your heir knows where you store it and how to access it.

What would you do to get in front of this seismic shift of DeFi/Blockchain?
Alex Smith, Managing Director, Individual IRA | Ric responded November 17, 2021

For sure, our Certificate in Blockchain and Digital Assets program is a great way to start. Beyond that, read as much as you can and attend as many events as you can. We list great news services at the DACFP Yellow Pages. And when you become fully immersed and are ready to devote full-time effort to this career-wise, the crypto community will welcome you!

Would you please enumerate what would be the likely investment options for a typical RIA client brokerage account?
James Pazderak, President, Covenant Wealth Advisors | Ric responded, November 18, 2021

That’s a big question. We cover it in detail in our DACFP Certificate in Blockchain and Digital Assets program – and we’re creating a new 1-hour presentation to address this specifically. Visit our Events page to register for our upcoming webinars and to watch replays of our past events. Also, you can find all the offerings at the DACFP Yellow Pages – it’s a great place to start your due diligence efforts

How can I find a digital asset savvy estate planning attorney for my clients who own and want to pass on their digital assets?
Cody Murray, Financial Planner, Bivin & Associates | Ric responded, November 9, 2021

We offer a list of estate planning attorneys with expertise in digital assets in our Yellow Pages directory.

Are you finding that RIA’s that offer digital assets to their clients are investing directly in Coins (Bitcoin/Ethereum etc.) using institutional accounts with Gemini/Coinbase, etc., through assets like Grayscale Bitcoin Trust hedge funds or some other way?
Michael Eastham, President, Fellowship Financial Group | Ric responded, October 19, 2021

It’s all over the map. RIAs are a diverse group of professionals – and as a result, their approaches to digital assets vary greatly. Thus, every company offering access to the marketplace is gaining assets.

Don’t worry about what others are doing. Explore each option that’s available. Then, using your knowledge about your clients and your practice, you’ll be able to choose the approach that’s best for you and each client.

What about using a self-directed Roth IRA?
H. William Wolfson, Wolfson Financial Advisors| Ric responded, October 19, 2021

Great idea! If gains occur as many project, placing those gains into a tax-free account is a great idea. Several firms, including Choice by Kingdom Trust, allow you to buy digital assets in IRAs and Roth IRAs.

Is there an ability to place good-til-cancelled, stop or stop-limit orders?
Zachary Hoyer, CIO, Financial Services | Ric responded, October 19, 2021

With many exchanges, yes.

Is direct asset investing available for non-qualified advisor managed accounts?
Daniel Hart, RIA, APS Management Group, Inc | Ric responded, October 19, 2021

Yes. Several firms facilitate this.

How do SEPs and Solo Ks work?
Ted Krammer, Principal, Krammer Financial | Ric responded, October 19, 2021

Same as IRAs. The paperwork is mildly different but no big deal.

Would a U.S. based CBDC be built on a public blockchain?
Karen Flynn, Retired, RIA | Ric responded, October 19, 2021

I have certainly felt that this is a given. However, Sunayna Tuteja, Chief Innovation Officer at the Federal Reserve, said at October’s DACFP VISION conference that use of a blockchain to create and operation a US CBDC is not a given. Other technology, she speculated, could be used, although she did not elaborate. My bet is still on DLT.

Can you create Roth IRAs for minors? Seems a tremendous long term growth opportunity.
Ryan Peterson, President, Copperleaf Capital| Ric responded, October 19, 2021

Sure, provided they have an earned income. I often joke with clients that they should have their babies become models, appearing in ads for baby food and kids’ clothing. Let them earn an income so they can place it into a Roth IRA! Teenagers mowing lawns and babysitting can also open Roth IRAs. Mom and Dad can hire the kids to do chores. Allowances are not eligible for IRA contributions, but income is!

Do crypto custodians hold digital assets in Omnibus accounts?
Leon Osborne, Due Diligence Consultant, MML Investor Services, | Ric responded, October 19, 2021

Those serving financial advisors do.

Does it make a difference whether the custody remains online or hardware (offline)?
Michael Eastham Advisor | Ric responded, October 19, 2021

Yes. Offline is safer (you can’t hack a filing cabinet) but doesn’t allow for instant trading. Online is convenient but exposes you to hacker risk.

Can a central bank digital currency and a private digital currency coexist in the U.S. political system?
Richard Turgeon, CIO, Wellspring Financial Advisors | Ric responded, October 19, 2021

Sure. And many think that’s exactly what will happen.

With the advent of a futures ETF, it would seem a spot ETF is not too far out. What would be a reasonable timeframe on expected ETF?
Peter Sullivan, Associate Wealth Manager, Thompson Wealth Management | Ric responded, October 19, 2021

I expect the SEC to approve a bitcoin ETF within 18 months. And I’ve been saying that for 7 years.

Please comment on stablecoins and their theoretical value. Their actual holdings seem to be very murky at best. The lack of Liquidity would likely to be an issue in another global economic event.
Thomas Yorke, Managing Director, Oceanic Capital Management | Ric responded, November 1, 2021

I have no idea what their theoretical value is. I only know their real prices.

Does rebalancing within digital assets change much if wash sale rule becomes applicable due to potential new law/rule?
Phyllis Chapman, Portfolio Manager | Ric responded, November 1, 2021

The wash sale rule applies to securities. Bitcoin is not a security; therefore, the wash sale rule does not apply to it. But other coins are considered to be securities, so the wash sale rule does apply to them. Also, OTC trusts, such as GBTC, BITW and OBTC, are securities and thus fall under the rule.

But all this is likely to be moot. The new tax bill has a provision that applies the wash sale rule to everything, whether they are securities or not.

What is the best way to educate the masses on bitcoin and digital assets?
Marcel Lewinson, Financial Professional | Ric responded, November 1, 2021

Give them a copy of new book, The Truth About Crypto, which is being released in May. You can preorder now, and if you’d like to order bulk copies at a discount, give us a shout.

What correlation do you find between the overall equity markets and the price of BTC?
Mindy Laprel, CFP | Ric responded, November 1, 2021

Zero. That’s a beauty of buying bitcoin – it helps with portfolio diversification, ala Markowitz and the Efficient Frontier.

Do “wash sale” regulations apply to digital assets?
Patricia Whitley, Advisor | Ric responded, September 22, 2021

The wash sale rule applies to securities. Bitcoin is not a security; therefore, the wash sale rule does not apply to it. But other coins are considered to be securities, so the wash sale rule does apply to them. Also, OTC trusts, such as GBTC, BITW and OBTC, are securities and thus fall under the rule.

But all this is likely to be moot. The new tax bill has a provision that applies the wash sale rule to everything, whether they are securities or not.

Is there any path to becoming a Crypto Advisor, without being an Investment Advisor?
Brendan Murray, President, Health & Wealth Inc. | Ric responded September 16, 2021

Anyone can advise anyone on anything, subject to federal and state regulation. For example, you need licenses for real estate, insurance, securities and investment management. You don’t need licenses for rare coins, wine or comic books.

Bitcoin and Ethereum are not securities. But many other digital assets are, as are the mutual funds and ETFs in this space. So, you would need licenses.

If all you’re doing is education, and not managing money for a fee, then I don’t think licenses would be needed. States often have lots of license requirements – for everyone from hairdressers to masseuses – so check on all this with a local attorney.

Are there any E&O carriers that have a policy that will cover digital assets?
Dustin Terry, Founder, Clear Harbor Wealth Management | Ric responded, September 7, 2021

Most standard E&O policies cover digital assets – when you obtain them via securities such as mutual funds and ETFs. And there’s plenty of opportunity to do that, with funds offered by Bitwise, Osprey and Grayscale, as well as Simplify, ProFunds and others. Lots of accredited funds are available, too, from Skybridge Capital, Pantera, Galaxy and more. There are also SMAs, such as Arbor Digital and Eaglebrook Advisors.

Buying bitcoin or other coins or tokens from exchanges like Coinbase or Gemini might not be covered by your E&O policy. But since you can’t manage assets for your clients in that way, I’m not sure why you’d want to.

In the training for becoming certified it notes that the last coins will be mined in 2140, how will the integrity of Bitcoin be maintained if there is no further compensation to verify the block chain?
Rick Dwyer, Chief Development Officer, Strategy Marketplace | Ric responded, Aug 13, 2021

In addition to block rewards, which is how miners receive bitcoins in exchange for solving the computational equations, users pay gas fees. These are costs to have your transaction verified ahead of other transactions. With the full 21 million coins in place, there will be lots of users, and lots of demand for transaction verification, and hence, lots of gas fees (both in number and price). Theoretically, the gas fees will be sufficient compensation to keep the miners motivated.

Give us the bear case. How would this fall apart?
Jason Cooke, Advisor, Hermann & Cooke | Ric responded, March 4, 2021

The captain of the Titanic was certain he had smooth sailing too. On that basis, that’s why you diversify.
Does that mean you should put all of your money into bitcoin? I think we can all agree that would be foolish. But to do none, out of extreme fear that something might go wrong, is equally foolish.

I think you need to look at it from a rational perspective of diversification and prudent money management. Just as you would with any asset class, especially an emerging one.

Ric responded, March 4, 2021

As RIAs, how do we handle compliance and regulation with bitcoin?
Bruce Lemley | Ric responded, February 1, 2021

I created Digital Assets Council of Financial Professionals to answer questions just like this one. The DACFP Certificate in Blockchain and Digital Assets course provides allows advisors to demonstrate to their clients that they have attained the education and can provide advice that is in the client’s best interest.

This is an online class with 13 CE credits, taken at your own pace. The 11 modules are split into two camps. The first five modules are on blockchain and digital assets. This is the fundamental knowledge and education needed to understand digital assets and explain it to clients. The second five modules are centric to financial advisors. This half focuses on practice management elements so that advisors can actually put all of these methods to use. The certificate covers questions such as these:

  • How do you integrate this into asset allocation?
  • How do you diversify?
  • And what are the reasons for doing so?
  • How do you create the asset allocation models?
  • Where do you buy it?
  • What exchanges what?
  • What custodians do you use?
  • What are the funds that are available for purchase?
  • How do you store it and safeguard it?
  • Do you do that through hot or cold wallets?
  • How do you track it?
  • How do you provide the record keeping?
  • How do you rebalance it?
  • How do you do the tax reporting?
  • How to integrate it into rebalancing with the rest of your portfolio and as a financial advisor?
  • How do you provide or receive compensation along with the rest of your asset management services?
  • What are the tax reporting obligations?
  • The regulatory requirements?
  • What are all the issues associated to allow the advisor to do their job as an advisor while serving the client in their best interests?

Please visit our Certification in Blockchain and Digital Assets page for further details and to register.

Ric responded, February 1, 2021

>> Add Your Comment
Are we able to put Bitcoin into an IRA?
Beth Bebb, Regional Learning Specialist, Thrivent | Ric responded, February 10, 2021

There are some platforms available where you can invest your IRA into Bitcoin. These are cumbersome. They are not primary players. It raises concern by the advisor who has reputational risk, as well as the investor who has confidence risk. And it reduces the degree to which there is engagement and involvement by both advisors and their clients. These do exist, but they’re more expensive than they alternatively would be. Some folks are saying, I don’t mind paying a 3 percent fee if I’m dealing with an asset that’s growing double digits every year.

Fidelity Digital Assets is providing these services for the institutional marketplace. They will eventually roll it out for the retail marketplace. You’ve got companies like Kingdom Trust, which manages 19 billion dollars in assets. That’s a qualified custodian you can actually use to buy Bitcoin in your IRA.

Ric responded, February 10, 2021

What is the likelihood that the SEC approves an ETF, and what is the estimated timeline?
Patrick McReynolds, Investment Analyst, Merrill | Ric responded, December 15, 2020

The SEC will approve a bitcoin ETF within 18 months. I’ve been saying that for five years. Hey, at some point, I’ll be right! Until then, you should explore alternative ways to buy. There are many, and we cite lots of them at

Ric responded, December 15, 2021

What would be your advice for clients asking how much to invest in Bitcoin?
Christopher Rubio, Account Development Representative, MongoDB | Ric responded, December 15, 2020

I’m the guy who pioneered the concept, a few years ago, of a one percent asset allocation model. In traditional asset management activities, if you’re not going to put three percent or five percent of assets into an asset class then why bother doing it? It’s not going to have a material impact on the portfolio. However, with Bitcoin, you don’t need five, 10 or 20 percent, which you would likely do with stocks or bonds. Bitcoin has a lot of unknowns technologically and regulatory.

My position is that you don’t need to do 10 or 20 to have a meaningful exposure. One percent allocation is plenty and the reason for that is Bitcoin’s incredible volatility.

A one percent allocation won’t hurt you. If you’re wrong, it’ll be annoying, but not devastating. And if you’re right, that one percent allocation can have a material impact on the improvement of your client’s returns.

Therefore, it is very much worthwhile to learn about Bitcoin. I’m not saying you have to like it. I’m saying as an advisor you have an obligation to learn about it.

Ric responded, December 15, 2020

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