Ben Strack

<div id="highlights-block_61f068989a733" class="highlights">
 <ul>
 <li>Eaglebrook plans to expand to broker-dealer and wirehouse markets in 2022, CEO says</li>
 <li>Wealth management space has been “completely underserved” from a crypto product perspective, according to Castle Island Ventures Partner Sean Judge</li>
 </ul>
 
</div>



A cryptocurrency investment firm has raised an additional $20 million of capital as it devises new products for wealth management professionals.



The Series A investment round for Eaglebrook Advisors— a registered investment advisor (RIA) that specializes in separately managed accounts (SMAs) — was led by venture capital firms Castle Island Ventures and Brewer Lane Ventures. Other backers include Gemini’s Frontier Fund, Fidelity Investments affiliate Avon Ventures, Jump Capital and Sybil Capital.



“This funding gives Eaglebrook the opportunity to improve our technology and solutions for wealth management firms,” Eaglebrook CEO Christopher King told Blockworks in an email. “We will continue executing in the RIA market and plan to move towards the [independent broker-dealer] and wirehouse markets in 2022.”



Founded in 2019, Eaglebrook works with about 500 financial advisors and 40 RIAs in the US that allocate client capital to Eaglebrook SMAs.



Eaglebrook is focused on accelerating the adoption of crypto SMAs as the vehicle of choice for wealth management firms. Looking to go beyond bitcoin and ether, King said, the firm is looking to add products focused on decentralized finance (DeFi), layer-1 and layer-2 protocols, NFTs, gaming and yield opportunities.&nbsp;



Castle Island Partner Sean Judge told Blockworks that wealth management has been “completely underserved” when it comes to crypto products. As the wealth transfer from baby boomers to millennials accelerate, he added, advisors will look for new ways to serve the younger generation.&nbsp;



“From all the diligence we’ve done from talking with RIAs and asset managers, it’s pretty clear that they’re looking for a solution, and we believe that fundamentally over time they’re going to continue to look for a solution,” Judge said.



The US Securities and Exchange Commission (SEC) <a href="https://cms.blockworks.co/when-will-the-sec-approve-a-spot-bitcoin-etf/">has not yet approved</a> an ETF that would hold cryptocurrencies directly. The agency gave the go-ahead to<a href="https://cms.blockworks.co/first-bitcoin-futures-etf-nears-1b-on-first-day-of-trading/"> the first bitcoin futures ETFs</a> in October, though industry watchers have said such products may not be a great tool for advisors and long-term investors.&nbsp;



“From a product perspective, separately managed accounts are fundamentally just a better end product for clients,“ Judge said. “But also, what Eaglebrook has built from a technology perspective to integrate with the broader portfolio and integrate with all the other technology solutions that these financial advisors use is a really unique asset.”



The fundraise follows <a href="https://cms.blockworks.co/eaglebrook-ceo-advisors-the-lowest-hanging-fruit-for-crypto-market/">Eaglebrook’s announcement in November</a> that it would launch a crypto educational platform for advisors. King called the $30 trillion wealth management market at the time “the biggest elephant in the room and the lowest-hanging fruit” for the crypto industry.



<a href="https://cms.blockworks.co/financial-advisors-bullish-on-crypto/">A report published last week</a> by Bitwise Asset Management and ETF Trends found that the percentage of financial professionals investing client funds in crypto rose from 9% to 15% over the past year.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



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Startup Raises $20M to Bridge Crypto, Wealth Management

<div id="highlights-block_61ef166f4f7f9" class="highlights">
 <ul>
 <li>Venture capital firm Seven Seven Six and crypto platform Gemini participated in EarlyBird’s $4 million funding round in November</li>
 <li>Users can now more easily set recurring investments, gift bitcoin and ether to kids, co-founders say</li>
 </ul>
 
</div>



Childhood investment specialist EarlyBird has tapped digital asset platform <a href="https://www.gemini.com/?utm_source=google&amp;utm_campaignID=13567832040&amp;utm_adgroupID=126782346954&amp;utm_creativeID=547717427706&amp;utm_medium=cpc&amp;utm_content=e&amp;utm_term=gemini&amp;gclid=CjwKCAiA0KmPBhBqEiwAJqKK41gYRHSKzWVjGWPiwR_-QydPscMazebDyPHW0rMYU2F-XT1ECkKB1xoCwP8QAvD_BwE" target="_blank" rel="noreferrer noopener">Gemini</a> to add crypto to its available asset classes.&nbsp;



EarlyBird — a registered investment advisor that until now focused on stocks and bonds — told Blockworks Tuesday that it’s launching its first crypto option. Gemini, an investor in EarlyBird, is set to provide custody for the digital assets.&nbsp;



The startup offers custodial accounts opened by a parent, relative or friend on behalf of a minor. The idea behind the accounts, which offer no tax advantages like a 529 plan for college savings, is to give children a jump-start on investing.&nbsp;



Additions to the <a href="https://www.getearlybird.io/crypto" target="_blank" rel="noreferrer noopener">EarlyBird Crypto</a> waitlist will get early access to the offering later this year, the company announced.



“We want to ensure that all American families have access to the future of wealth creation,” EarlyBird Co-founder and CEO Jordan Wexler told Blockworks. “They will live in a world that is deeply ingrained in blockchain technology, Web3 and of course cryptocurrency, and we want to ensure that these kids have exposure to all of those digital assets as part of their core portfolio.”



<div class="wp-block-image"><figure class="alignleft size-large is-resized"><img loading="lazy" decoding="async" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/crypto-screens-hero-01-1024x535-1.jpg" alt="" class="wp-image-15968" width="357" height="186" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/crypto-screens-hero-01-1024x535-1.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/crypto-screens-hero-01-1024x535-1.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/crypto-screens-hero-01-1024x535-1.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/crypto-screens-hero-01-1024x535-1.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/crypto-screens-hero-01-1024x535-1.jpg?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/crypto-screens-hero-01-1024x535-1.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/crypto-screens-hero-01-1024x535-1.jpg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/crypto-screens-hero-01-1024x535-1.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/crypto-screens-hero-01-1024x535-1.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/crypto-screens-hero-01-1024x535-1.jpg?w=50 50w" sizes="auto, (max-width: 357px) 100vw, 357px" /></figure></div>



Crypto investments for now will be limited to bitcoin and ether, but the company said that could change in the future — including when it comes to NFTs.



The crypto offering follows EarlyBird’s third round of funding in the fourth quarter last year, with venture capital firm Seven Seven Six leading the $4 million round. Gemini also participated.&nbsp;



Founded in December 2020, EarlyBird currently offers five investment portfolios.&nbsp;



Gemini backed EarlyBird via its <a href="https://www.gemini.com/frontier-fund" target="_blank" rel="noreferrer noopener">Frontier Fund</a>, the company’s venture arm. Launched in the second quarter of 2021, the fund has about 30 portfolio companies, according to Marshall Beard, Gemini’s head of strategy and corporate development.



“When I think about investing through the fund, I think about how does this support Gemini?” Beard said. “Does this lead to a partnership, does this lead to an acquisition? Are they working on technology that we don’t have expertise in? Are they working on technology that we don’t have the bandwidth to do?”



Gemini has been focused on expanding its institutional business. The company <a href="https://cms.blockworks.co/gemini-now-a-one-stop-shop-for-advisors-after-bitria-buy/" target="_blank" rel="noreferrer noopener">announced its buy</a> of digital asset portfolio management platform BITRIA earlier this month and <a href="https://cms.blockworks.co/gemini-acquires-crypto-trading-tech-platform-omniex/" target="_blank" rel="noreferrer noopener">revealed its purchase</a> of trading technology platform Omniex.&nbsp;&nbsp;



Gemini’s partnership with EarlyBird fills a gap for the company by offering crypto access to children, Beard explained.



“In the future, as we expand wealth management, as we expand investment management, as we expand family planning, we’re going to work with EarlyBird,” he said.



EarlyBird made several hires following the latest fundraise, COO and Co-founder Caleb Frankel told Blockworks, including Will Steiner, its head of content and literacy.



Users on the EarlyBird Crypto waitlist will receive a six-part course via email about crypto and blockchain technology. The idea, Frankel said, is to showcase to parents crypto’s potential as a long-term asset.



“What our customers were really asking for was the opportunity to be able to not just gift generalized crypto or a crypto ETF, but the ability to gift a specific asset to tell the story about the technology,” Frankel said.&nbsp;



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



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Parents Can Invest in Crypto for Their Kids Via Startup

<div id="highlights-block_61ef27c31cae3" class="highlights">
 <ul>
 <li>“The risks of investing in cryptocurrencies are high, and the investment case is weak,” a Vanguard spokesperson said</li>
 <li>BlackRock’s blockchain ETF may have trouble surpassing the assets of Amplify Investments’ Transformational Data Sharing ETF (BLOK)</li>
 </ul>
 
</div>



BlackRock has <a href="https://cms.blockworks.co/blackrock-files-for-crypto-etf/" target="_blank" rel="noreferrer noopener">new plans</a> to launch a blockchain ETF could spur large competitors to follow suit, according to industry participants. 



How such products will fare in the crowded space, however, remains to be seen.&nbsp;



The world’s largest asset manager in <a href="https://www.sec.gov/Archives/edgar/data/1100663/000119312522014777/d286885d485apos.htm" target="_blank" rel="noreferrer noopener">a regulatory filing</a> outlined an ETF that would invest in companies involved in the development and usage of crypto technologies.&nbsp;



“I think this underscores the idea that blockchain technology is now mainstream,” said Sumit Roy, crypto editor and analyst for <a href="https://www.etf.com" target="_blank" rel="noreferrer noopener">ETF.com</a>. “I do believe it will encourage competitors like State Street and others to launch similar products.”



State Street, which oversees about $40 trillion of assets, <a href="https://cms.blockworks.co/state-street-launches-digital-finance-unit-for-crypto/" target="_blank" rel="noreferrer noopener">launched a new digital finance division</a> last year. A spokesperson declined to comment on whether its asset management division is considering ETFs in the space.&nbsp;



A representative for Vanguard, which manages more than $8 trillion in assets —&nbsp; including $2 trillion in US ETFs — said the company has no plans to pursue a digital assets product.&nbsp;



“In Vanguard’s view, the risks of investing in cryptocurrencies are high, and the investment case is weak,” the spokesperson said. “Unlike traditional asset classes, such as stocks and bonds, cryptocurrencies lack intrinsic economic value and typically generate no cash flows, such as interest payments or dividends.”



The representative added that the company believes blockchain has potential, noting that Vanguard used blockchain technology to improve its data indexing and digitizing certain currency markets.



David Botset, head of equity product management and innovation at Schwab Asset Management, said clients are increasingly interested in cryptocurrencies.&nbsp;



Charles Schwab already offers four mutual funds and four ETFs with crypto ties from third-parties.



“We are currently evaluating how and when we could offer our clients additional opportunities for exposure to cryptocurrencies, including opportunities such as spot cryptocurrency or blockchain technologies in the form of an ETF,” Botset told Blockworks in an email.



Invesco, another top-5 ETF issuer, <a href="https://cms.blockworks.co/invesco-proposes-crypto-economy-etf/" target="_blank" rel="noreferrer noopener">launched</a> the Invesco Alerian Galaxy Crypto Economy ETF (SATO) in October. The asset manager said <a href="https://cms.blockworks.co/invesco-and-galaxy-team-to-build-suite-of-crypto-etfs/" target="_blank" rel="noreferrer noopener">in September</a> it was teaming up with Galaxy Digital on physically backed digital asset ETFs.



Amplify Investments’ Transformational Data Sharing ETF (BLOK) is currently the largest blockchain-focused ETF. It launched in January 2018 and has grown to roughly $1 billion of assets.



Other large funds in the space include the Siren Nasdaq NexGen Economy ETF (BLCN) and the First Trust Indxx Innovative Transaction &amp; Process ETF (LEGR), which have about $230 million and $150 million of assets, respectively. Most that have launched in the last year have not yet gained significant assets.&nbsp;



“If I’m in a product development area of an ETF company, and I’m looking at this…[the space is] way oversupplied right now,” Bloomberg Intelligence Analyst Eric Balchunas said. “On the flip side, if you’re a big firm, and you have a relationship with a bunch of advisors and your salespeople go out to talk to them, now that BlackRock has this in their toolkit, maybe you need it, too.”



<h3 class="wp-block-heading">Will BlackRock overtake BLOK?</h3>



Despite BlackRock’s reach, Balchunas said he doesn’t expect its blockchain ETF to instantly dominate markets.&nbsp;



“Even BlackRock is going to have a tough time unseating the first to market — BLOK is very known, the ticker’s easy, it’s liquid,” Balchunas said.



Despite BLOK’s lead, Roy argued that there has not yet been a “breakout product” in the blockchain category.



“I think BlackRock coming in with the respected iShares brand is going to catch a lot of investors&#8217; attention,” Roy said.&nbsp;



And the ETF could be one of several steps into crypto investments for the firm, according to Balchunas.



“This is a baby step into I think a larger ETF suite for BlackRock, which would include spot ETFs, crypto baskets,” he said, adding that he doesn’t expect the company to file for a spot bitcoin ETF until one is approved by the US Securities and Exchange Commission (SEC).



A spokesperson for BlackRock, which manages about $10 trillion, declined to comment on future crypto investment products.&nbsp;



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.