Welcome to The Ask, where each week Crypto Investor interviews essential voices doing the work to make crypto 'mainstream.' Exchange lightly edited for clarity.

This week, editor-in-chief Michael Bodley spoke to Ben Cruikshank, head of RIA investing platform Flourish. The company recently rolled out Flourish Crypto, its first crypto platform, in partnership with custodian Paxos Trust.

Is it Bitcoin specifically you’re launching with, or is it Bitcoin and other kinds of cryptocurrencies? How do you vet which cryptocurrencies get included on the platform?

Cruikshank: We build financial products that meet the needs and demands of our advisors and so whenever we think about what to bring to market, it's really important for us to just go out and listen and talk to advisors and figure out where the demand is today. On day one, we will launch with support for Bitcoin only, but we expect to add support for Etherereum very quickly, maybe a few weeks, maybe a few months and add that to the platform.

The timeline for anything past Bitcoin and Ethereum I'd say is much more uncertain, which really reflects the fact that advisors are hearing from their clients demand for Bitcoin and Ethereum, but not necessarily yet hearing demand for other parts of the cryptocurrency ecosystem, and from the advisor perspective a huge part of that is the regulatory landscape. Advisors are predominantly regulated by the SEC. SEC staff has given pretty clear guidance that Bitcoin and Ethereum are not securities ... The SEC has not been so clear on really any other part of the cryptocurrency ecosystem. And so until there's more clarity on things beyond Bitcoin, in theory, I think advisors will be hesitant to engage.

You’re also including compliance features for RIAs, right? What features are integrated into the platform and how do they work?

Cruikshank: We have obsessed more about compliance than almost any other aspect of this product bringing it to market. And really, our solution, top to bottom, we are thinking about how will this fit into the RIA compliance framework, because as fiduciaries, advisors operate within one of the most highly regulated parts of all financial services. So, there’s no one answer.

There are quite a lot of different answers, but I can give a few examples. One case is giving guidance on the overall landscape. We're actually partnering with a white-shoe law firm to author a white paper on how our RIAS can engage with cryptocurrency, broadly informed by the Investment Advisors Act of 1940 and custody rules and a lot of very specific rules and regulations that pertain to advisors. So, hopefully, that helps give advisors something of a blueprint to understanding the landscape.

We are also partnering with a RIA compliance consulting firm to prepare essentially all the documents an RIA would need internally in order to adopt crypto. That's everything from adding language to risk disclosure statements to internal policies and procedures … to finally bring crypto to their clients if they so choose.

You’re offering RIAs a way to take direct ownership of Bitcoin on behalf of their clients. Obviously, RIAs can get synthetic exposure to Bitcoin through GBTC or a similar product. Why is the direct ownership piece important?

Cruikshank: I’ll start by just noting investors have lots of ways of interacting with Bitcoin. At this point, there are tens of millions of people who are already investing. Advisors, though, feel like they’re faced with a difficult choice right now without our solution or without products like it. The advisor we’re talking with, often, with a client expresses interest in crypto they really have three options.

Option No. 1 is to say, ‘We don’t deal with that. That’s not part of our business.’ That’s not a great answer for advisors. Option two is to actually send them directly to the retail platforms, but then those advisors lose sight of those assets. They can’t incorporate them in the financial plan. They can’t help their clients with tax strategies and guidance — that’s problematic.

And then number three is to offer one of a variety of different financial products to their clients. Those products might be an appropriate solution for some clients, and I would always stress that the world of advisors and advice is very personal. So, those might be a great product for certain clients, but they come with some pretty well known drawbacks, depending on the product you're looking at, you might be looking at significant tracking error.

The price of the fund (can deviate) dramatically from the price of underlying Bitcoin. And if what you were looking for is pure exposure to the underlying asset, that can be something challenging to explain to your clients. They can be very expensive. They can be tax inefficient or at least certainly taxed very differently from the underlying asset when you're looking at products that investors sign up for ... There might be investor accreditation requirements you have to have certain net-worth or income standards. There might be huge minimums. There might be liquidity requirements or restrictions.

And again, they might be the appropriate product for some clients, but that laundry list is pretty jarring in juxtaposition to the fact that anybody can go to Coinbase, open an account in five minutes and invest. And so really what we wanted to do is bring those worlds together with an incredibly easy account opening experience that will take most clients five minutes or less.

Welcome to The Ask, where each week Crypto Investor interviews essential voices doing the work to make crypto 'mainstream.' Exchange lightly edited for clarity.

This week, editor-in-chief Michael Bodley spoke to Ben Cruikshank, head of RIA investing platform Flourish. The company recently rolled out Flourish Crypto, its first crypto platform, in partnership with custodian Paxos Trust.

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