Bitcoin model portfolios launched by 3iQ, Gemini

As investors patiently await the approval of a physical Bitcoin exchange-traded fund in the U.S., cryptocurrency providers are getting creative with new options for clients to directly invest in digital assets.

A subsidiary of Canada’s largest digital asset manager, 3iQ Digital Assets, has launched new separately managed accounts and model portfolios for U.S. wealth managers. The latest platform, called Q-Map, offers four model portfolios to RIAs and other wealth management providers looking for cryptocurrency exposure, including institutional investors and family offices. 

One of the benefits is flexible pricing, said Chris Matta, chief executive of 3iQ U.S. For model portfolio investors, fees range from 1% for single-token accounts to 2.5% for multi-token index strategies. Fees for custom strategies are priced based on the level of complexity.

“The investment community gravitates toward familiar product structures,” Matta said. “Most crypto solutions in the U.S. only offer exposure to Bitcoin or a single asset. The crypto ecosystem has meaningfully evolved over the last six months.”

Gemini Trust Co., a crypto exchange and custodian launched by the Winklevoss twins in 2014, serves as the custodian, and the digital turnkey asset management platform BITRIA will offer the tech tools to get advisers on board. Tax-loss harvesting and other portfolio customizations are also available, which are more difficult to find on private exchanges or through exchange-traded funds.

The announcement comes on the heels of a similar launch last week by Ritholtz Wealth Management and WisdomTree Investments Inc. That product also offers access to a cryptocurrency index in the form of a separately managed account on the Onramp Invest platform.

Both products are filling a void created by the Securities and Exchange Commission’s reluctance to consider a Bitcoin ETF. Regulators in Canada have embraced cryptocurrency and allowed ETFs that physically hold digital assets, including the Fidelity Advantage Bitcoin ETF, which can invest in the cryptocurrency directly and began trading Thursday.

Wealth managers will continue to create innovative new products if the SEC holds off on approval. Even with worrisome volatility, Bitcoin has delivered returns of nearly 6,000% over the past five years, according to Bloomberg. 

“Regulatory restrictions and a limited menu of options have presented different sets of challenges for U.S. institutions, family offices, RIAs and wealth management platforms seeking exposure to digital assets,” Matta said. “We are seizing an opportunity to offer diverse exposure to ... the broader universe of cryptocurrencies.”