Just a couple weeks after Robinhood debuted tokenized stocks to users in Europe, famed financial advisor Ric Edelman tells InvestmentNews he expects blockchain-backed stock trading to become mainstream in US markets by the end of the decade.
“By the end of the decade, tokenization will be the dominant investment platform in the industry, far eclipsing ETFs. In fact, ETFs, as we know them today, really won't exist in five years. They'll be replaced by tokenized versions of themselves, and this will introduce not only 24/7 trading, but an array of investment opportunities that today don't even exist,” said Edelman, who co-founded Edelman Financial Services with his wife Jean in 1986. The mega-RIA now operates as Edelman Financial Engines and oversees nearly $300 billion in assets.
Edelman, who won this year’s Lifetime Achievement Award in the Wealth Management Industry at the InvestmentNews Awards in June, authored a new whitepaper for his Digital Assets Council of Financial Professionals (DACFP) that recommends investors to allocate at least 10% and as much as 40% of their portfolios to cryptocurrencies such as Bitcoin and Ethereum.
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“Tokenization is the next major advance that blockchain technology is bringing to the marketplace. There are now half a dozen firms that are tokenizing shares of stocks and other securities,” said Edelman, who believes the price of Bitcoin will reach $500,000 by 2030.
In late June, Robinood’s app in Europe rolled out tokenized shares of more than 200 US stocks and ETFs including private companies such as OpenAI and SpaceX as well as public giants like Apple and Nvidia. The commission-free tokens can be traded around-the-clock, five days a week.
Regulators in the European Union are questioning Robinhood over its tokenization product. Robinhood’s CEO Vlad Tenev recently said, “For tokenization in the US, we do believe that the SEC has the authority to make it happen without legislation.” Tokenization would further entangle elements of cryptocurrency into US financial markets. Edelman says studies from DACFP show half of U.S. financial advisors personally own Bitcoin, but only 20% are recommending Bitcoin to clients due to compliance and job security concerns.
“Compliance departments have been very reluctant to approve crypto, investment committees have been very slow to approve crypto-related investment products or strategies on the platform,” Edelman said. “They're fearful that if they approve it and something goes wrong, they could lose their jobs. And so they see no reason to say yes when it doesn't do their careers any good, and this is why we have seen most advisors being unable to recommend Bitcoin to clients, because they're simply not given permission to do so.”
The Trump administration’s position towards cryptocurrency and institutions such as BlackRock introducing ETFs tied to Bitcoin and Ethereum are driving factors in Edelman’s perceived changing landscape of financial advisors growing closer to crypto products. BlackRock’s Larry Fink has also been a proponent for tokenization.
“We have gone from an administration that was strongly opposed to crypto to an administration that strongly supports it, and this is giving firms the comfort that they have needed to engage with crypto in a way they never did before,” Edelman said. “We're going to see over the next 12 to 18 months, virtually every firm adding crypto investment opportunities to their platforms.”
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