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MassMutual’s Flourish Crypto Adds ETH, Releases Regulatory Blueprint


blockworks.co 03 December 2021 00:58, UTC
Reading time: ~3 m

MassMutual’s investment platform Flourish Crypto has added ethereum to its suite of assets, giving registered investment advisors (RIAs) greater access to the digital asset market, the insurance giant announced Thursday. 

Flourish started about three years ago as Flourish Cash, a management solution that now works with about 420 RIAs around the country and represents more than a trillion dollars in total end-client assets. Flourish Crypto launched in September 2021 first with bitcoin as RIAs continued to express interest in digital asset investment opportunities. 

“We started speaking with advisors about a year ago, and the change in demand over the last year has just been staggering,” said Ben Cruikshank, head of Flourish. “Today, virtually every single firm we’re speaking with is saying ‘we would like bitcoin and we would like ethereum, and we would like your perspectives on what’s coming next.’ I just can’t underscore enough how radically That conversation has changed really in just six to 12 months.” 

Flourish Crypto has onboarded dozens of RIAs with an average assets under management of around $1 billion. RIAs generally have a difficult time accessing the crypto market on behalf of their clients because tokens cannot be traded on traditional brokerage platforms. The Flourish product has filled a significant gap in the market, Cruikshank said. 

“We watched as crypto became a multi-trillion dollar asset class, we watched as 10s and 10s of millions of Americans are opening accounts or buying and selling cryptocurrencies,” he said.  “And largely, when we spoke to RIAs, they felt like they were completely just left on the sidelines — that this whole crypto world was just moving past them.”

Flourish Cash helped the Flourish team start to understand the RIA community and build a cryptocurrency platform that met their needs, Cruikshank said. 

“It is built with the flexibility they need around trading, transfers, regulatory and compliance considerations and integrations, client support, you name it,” he said. “We kind of customized the crypto solution for the adviser world so that RIAs could access crypto so that they could bring it to the client so that they can eventually help millions of millions of new Americans get what is often their first exposure to crypto.” 

Regulatory uncertainty

As different regulatory bodies in the US continue to grapple with how to approach and oversee the digital asset space, compliance issues have been top of mind for many RIAs, Cruikshank said. The US Securities and Exchange Commission (SEC) is the primary regulator for the RIA community, but the SEC has been fairly unclear about what the guidelines are around digital assets. 

“As an advisor being regulated by the SEC directly, making sure what you’re doing is in the lines of what your regulators are comfortable with is really, really important,” Cruikshank said. 

In response to the uncertain regulatory environment, Flourish partnered with Perkins Coie LLP, an international law firm specializing in the financial technology, blockchain and investment management space, on a whitepaper that discusses regulatory and compliance considerations for RIAs looking to engage with cryptocurrencies. 

“If you think back to all the reasons that advisors cannot adopt crypto today, uncertain regulatory and compliance landscape is often one of the top three things on the list,” Cruikshank said. “Fortunately, we think there is certainly a path forward.”

In terms of what is next for Flourish Crypto, it is difficult to predict which tokens or cryptocurrencies may be added to the Flourish Crypto suite in the future, Cruikshank said. The SEC has determined that neither bitcoin nor ethereum are considered “securities” for the purpose of federal securities laws, but it is unclear how other tokens may be classified in the future. 

“Until there’s more regulatory clarity, you’re not going to see advisors adopting things too far out on that spectrum,” Cruikshank said. “With regards to additional tokens or additional cryptocurrencies, it is a slow but steady and very careful and very regulatory-first type of expansion.”

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