Eaglebrook Advisors, a Bethesda, Maryland–based RIA SMA platform with $225 million in AUM, announced it has launched a Bitcoin and Ethereum separately managed account strategy with Franklin Templeton.
Eaglebrook, which serves 70 RIAs that collectively manage more than $300 billion in assets, said the strategy was specifically designed for RIAs and U.S.-based wealth managers. It will be custodied with Anchorage Digital, the first and only federally chartered crypto bank, which launched its own SMA offerings last November.
“Backed by Franklin Templeton’s robust digital assets research, this partnership is designed to provide an accessible and tax-efficient path to incorporating digital assets into client portfolios,” Chris King, founder and chief executive officer of Eaglebrook, said in a statement. “Our focus remains on offering diversified investment solutions that cater to the evolving needs of advisors and their clients.”
The news comes at a contentious but profitable time for cryptocurrencies.
At the start of this year, after multiple lawsuits and numerous application denials, the Securities and Exchange Commission finally approved a spot Bitcoin exchange-traded fund, with Chair Gary Gensler cautiously stating with his announcement that the asset class was “primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing.”
The SEC has also spent the past year cracking down on cryptocurrencies, in part due to the increase in crypto-related fraud and the collapse of prominent crypto exchanges.
Despite that, Bitcoin rose 56.42 percent year-to-date from $44,172 at the start of the year to $69,094 on Wednesday. Ether saw a similar increase, rising 49.5 percent year-to-date from $2,352 to $3,517 on Wednesday.
In comparison to ETFs, SMAs provide investors and their advisors with greater tax optimization in order to reduce or defer their capital gains tax liability. According to Eaglebrook, this new strategy will be actively managed and aims to outperform a market cap–weighted portfolio consisting of Bitcoin and Ethereum.
“The primary distinctions between crypto SMAs and the spot bitcoin ETFs is tax optimization and portfolio customization,” King told RIA Intel in an email. “With crypto SMAs, clients have direct ownership of Bitcoin and digital assets, allowing them to leverage automated tax-loss-harvesting strategies to reduce or defer their tax liability.”
King stressed that crypto SMAs work in conjunction with existing portfolios. “Crypto SMAs are not in competition with a market cap–weighted portfolio,” he said. “Eaglebrook is giving exposure to diversified asset classes with the potential of greater returns.”
