Sarah Cummings, executive director and ETF strategist at Morgan Stanley Investment Management, and Ryan Tannahill of iA Private Wealth USA have detailed essential due diligence frameworks for financial advisors navigating the digital asset market. As of May 21, 2026, advisors have access to an expanding range of crypto exchange-traded products (ETPs) that offer a way to integrate digital asset exposure into client portfolios through traditional brokerage accounts. These investment vehicles, often structured as grantor trusts under the 1933 Act, require a deep understanding of custody arrangements and pricing benchmarks.
The institutional landscape for these products has shifted rapidly since early 2024. The BlackRock iShares Bitcoin Trust (IBIT) exceeded $93 billion in assets under management by November 11, 2025. This growth coincides with IBIT’s inclusion in BlackRock’s recommended portfolio for global advisors, where a 1-2% allocation is suggested for diversification. While bitcoin faces correction risk periodically, industry leaders like Michael Gates of BlackRock maintain that long-term growth factors support the asset’s inclusion in model portfolios.
Advisors evaluating these products must distinguish between gross and net expense ratios, particularly when fee waivers are active. While fee compression is visible across the market, expense ratios still vary. For instance, the Grayscale Bitcoin Trust ETF (GBTC) maintains a 1.50% expense ratio, whereas the Grayscale Bitcoin Mini Trust ETF (BTC) offers the lowest industry fee at 0.15%. Beyond costs, onscreen liquidity may not reflect actual execution quality, and Sarah Cummings suggests engaging with trust sponsors or liquidity providers prior to executing larger trades.
Risk management in bitcoin-backed lending
Clients looking for liquidity without selling their holdings are increasingly exploring bitcoin-backed loans. In an \”Ask an Expert\” session, Ryan Tannahill warned that margin calls represent the primary risk for these strategies. If the price of bitcoin drops sharply, clients may face liquidation or be required to post additional collateral. Such forced sales often occur during market downturns, potentially triggering a taxable event and compounding financial losses for the investor.
Custody remains a central concern for lending arrangements. Most centralized lenders require possession of the client’s bitcoin for the duration of the loan. Tannahill noted that while borrowing preserves upside potential for those with high conviction, a clean sale is often a simpler move for clients who are uncertain about their position. Advisors must verify how assets are protected and where they are held before committing client funds to these platforms.
Expanding exposure through altcoin and thematic ETPs
The market for digital asset ETPs has diversified to include various blockchain ecosystems. On May 20, 2026, the Grayscale Ethereum Staking Mini ETP (ETH) was priced at $20.30, while the Grayscale Solana Staking ETP (GSOL) traded at $6.44. These products allow for the incorporation of staking rewards and layer-one exposure. Other specialized vehicles like the Grayscale XRP Trust ETP (GXRP) and the Grayscale Sui Staking ETP (GSUI) also provide targeted access to specific protocols. Future Cardano price outlook movements may also influence advisor sentiment as more assets seek a return to significant price milestones.
For advisors preferring an ecosystem-wide approach, the Schwab Crypto Thematic ETF (STCE) tracks companies involved in mining, banking, and blockchain implementation rather than owning coins directly. This strategy aims for global exposure to the technology’s beneficiaries. Furthermore, the U.S. Senate Banking Committee has advanced the Clarity Act, a market structure bill that recently moved to the Senate floor. This legislative progress comes as international regulators, including the Bank of England, prepare to finalize domestic stablecoin rules by the end of 2026.
Leveraging separately managed accounts for tax alpha
Separately managed accounts (SMAs) offer an alternative to ETPs, providing higher levels of customization and potential tax advantages. Eaglebrook Advisors currently works with 105 wealth management firms managing a combined $2 trillion in assets as of May 21, 2026. CEO Chris King noted that SMAs are an effective solution for managing concentrated holdings, stating, \”It’s a solution if you have, say, $10 million in Ethereum, or $500,000 in Solana.\”
These platforms integrate with traditional advisory tools like Morningstar and Orion, allowing for seamless portfolio management. By utilizing regulated custodians such as Anchorage Digital and Gemini, SMAs provide institutional-grade security. This structure allows advisors to deliver \”tax alpha\” by diversifying large positions without immediately triggering the taxable events associated with selling assets to buy into a traditional ETF wrapper.