Wall Street's crypto awakening

In the same month as Bitcoin hitting an all-time high above $126,000, over $19 billion in leveraged crypto positions were liquidated on October 10 − history’s largest single-day sell-off event on record. 

The brief but dramatic crash was triggered by that day’s Chinese tariff announcement from President Donald Trump. But even as the president engages in erratic or sudden nature, the volatility of Bitcoin is dropping as legacy institutions leave their mark. 

“The biggest [Bitcoin] declines in the past have been 70 or 80 percent and lasted for years. This decline was 30 percent and lasted about a week. In other words, it was a lot more like 1986 than 1929,” says Ric Edelman, the famed financial advisor turned crypto evangelist. “And the reason that Bitcoin is not likely to experience a 70 percent decline in the future, and the reason it’s not likely to sustain a bear market like it did in the past, is because we now have institutional engagement that we never had before.” 

Edelman, who retired in 2021 from the over $300 billion mega-RIA Edelman Financial Engines, launched the Digital Assets Council of Financial Professionals in 2015 as a crypto education network for advisors and their firms. Edelman’s organization now assists Schwab on its forthcoming spot crypto trading, which Schwab CEO Rick Wurster said in last month’s Q3 earnings call is likely to launch in the first half of 2026. 

“Schwab is very aggressively developing its platform to trade and custody digital assets, and that is going to force all the other firms that compete with Schwab to do the same thing,” Edelman tells InvestmentNews. “Advisors are increasingly interested, and if the firm doesn't make it available, their clients are simply going to go elsewhere. Firms may lose advisors over this, and they’ll certainly lose credibility by not engaging in what is the fastest growing asset class in the industry.” 

Edelman says his work with Schwab is focused on advisor training with regards to integrating client crypto holdings across tax planning, estate planning, philanthropy, and divorce planning. Edelman expects the price of Bitcoin to reach $500,000 by 2030, and he currently recommends portfolio allocation of 10 to 40 percent in crypto. 

“Schwab clients already have access to spot crypto ETPs, crypto futures, and even non-ETF OTC crypto coin trusts through our trading platforms,” a Schwab spokesperson said in a statement to InvestmentNews. “We remain on track to begin rolling out spot crypto to clients in the first half of 2026, starting with Bitcoin and Ethereum. We’ll launch this offer the Schwab way, combining education, research, risk management, and service at a great value.” 

Coinbase is the largest cryptocurrency exchange in the US, while Binance holds that rank globally. October was a pivotal month for legacy Wall Street brands embracing crypto, suggesting that Coinbase’s top spot might not last much longer. Last month saw Morgan Stanley drop its restrictions to let their advisors recommend Bitcoin ETFs to clients, while Citi told CNBC that it aims to launch its own crypto custody service in 2026. 

“Schwab is a trusted name, so I think they could potentially put out the lights of a lot of the folks that are doing Bitcoin custody now. Let’s just be honest, are you going to custody with Coinbase or are you going to want custody with Schwab?” asks Tyrone Ross, CEO of Turnqey Labs, a software startup that brings crypto asset data into advisor workflows.  

“Having [crypto] trading and custody [at Schwab] opens up a lot of flexibility for advisors who want to build their own models, get clients direct exposure. It makes it easier to bill on, rebalancing, forecasting, building proposals; it could get really awesome,” says Ross. “I think if Schwab does it [and] Citigroup announced it, why wouldn't Pershing? why wouldn't Altruist at some point, or LPL?” 

The SEC began allowing spot Bitcoin ETFs in January 2024, trailblazing launches from asset managers including BlackRock, Franklin Templeton, Fidelity, and Grayscale. Trump’s GENIUS Act signed into law in July was the first federal regulatory crypto framework to pave the way for stablecoins; some Wall Street executives are contemplating further crypto legislation. 

“I think one of the biggest things would be allowing staking in the ETFs,” says Max Gokhman, deputy CIO for Franklin Templeton Investment Solutions. “Right now, if you’re buying an ETF and it’s not giving you yield, it’s kind of like buying a multi-family and not getting to charge rent. So it’s one thing that we really think is logical, and we do think that regulation should allow for that.” 

Franklin Templeton’s allocation of digital assets to client portfolios will typically result in them also reducing exposure to riskier equities like emerging markets and international small caps, as well as increasing exposure to fixed income assets like treasuries, Gokhman says.  

Institutions are becoming increasingly bullish on tokenization, which utilizes blockchain technology powering cryptocurrency. Robinhood debuted tokenized stocks in Europe in June, letting users buy US-listed stocks and ETFs as well as shares in private companies such as OpenAI and SpaceX. In September, Nasdaq sent a proposal to the SEC requesting to let investors trade tokenized versions of listed securities.  

“Some of the things that Robinhood’s looking at, we’re actually looking at a lot of these concepts ourselves, which is tokenizing new asset classes,” Gokhman says of Franklin Templeton. “So tokenizing private equity LP shares, for example, or tokenizing real world assets like fine art or other cultural assets, royalty streams.” 

Fractional shares through tokenization are viewed as a promising future offering to retail investors, Gokhman says. He conceptualizes that investors could purchase shares in their favorite athletes or musical artists to gain royalty payouts based on sponsorship contracts, salary, or other earnings.  

“If we tokenize equities, it really is a 24/7, 365, market. When I look out even five years, I think we're going to see much more of all assets trade on chain,” says Gokhman.   

“I think it’s actually going to fundamentally change the role of the advisor as well, from one who in the past was more of a portfolio manager to now more of a wealth coach, to being kind of a holistic almost life coach, where they’re really looking at how they tie all financial aspects of their clients together in one package,” he adds. 

Edelman echoes the promise of blockchain assets, saying that retail investors will be able to trade tokenized versions of real estate, artwork, comic books, sports memorabilia, rare coins and stamps, and more assets.  

“Instead of having 15 or 20 asset classes that are available today as a portfolio diversification strategy, we’re in the future going to have 15,000 or 20,000 asset classes,” says Edelman.  

“You’ll be able to own a piece of Taylor Swift's music. So instead of being a fan listening to her music on Spotify, every time somebody does listen, you’ll earn a piece of the royalty,” Edelman says. “You’ll be able to own a piece of your favorite author so that when those royalties are generated, you earn a piece of it. When your favorite NFL quarterback gets a new salary contract, you’ll earn a piece of that contract, making you an owner rather than merely a fan.”