You Don’t Have To Be An Accredited Investor To Get Started
Michael from Rochester, NY: I've got a question about the fund BITW. I've got brokerage accounts with Edward Jones and JPMorgan Chase, and I want to invest in BITW, but it's not available through either one of those accounts. So I looked into BitwiseInvestments.com. But as I get further into the account application process, I see they require quite a large minimum investment.
Michael: Yes. And proof that you are an accredited investor. Several weeks ago, I heard on your show how you feel about such requirements, and I agree with that. I've never had such a difficult time making an investment.
Ric: So, yeah, I hope that Gary Gensler, the chair of the SEC, is listening to this right now. I mean, this is a classic example of the frustration that we all have in the crypto community. Investors wanting to invest in crypto and the cumbersome nature of the investment rules is frustrating investors for no effective purpose. And it's frankly all the SEC's fault because they have not said yes to a Bitcoin ETF. If they would say yes to an ETF, you'd be able to do this at your brokerage accounts at JPMorgan or anywhere else. You'd be able to do this very simply easily online with any discount broker.
And we all know ETFs. They're simple, easy to use. They're very low in cost, highly transparent, completely liquid. They're the most popular investment vehicle in America for all the good reasons. And yet the SEC has so far said, no, they're not going to allow a Bitcoin ETF to come onto the marketplace. Makes absolutely no sense. That leaves us to have to use other methodologies that the SEC does allow. These are alternative platforms that are frankly a lot more cumbersome. So there are two ways that you can access the Bitwise 10 Crypto Index Fund. That's what BITW is. BITW is the symbol, the ticker that if you wanted to go into a brokerage account to buy it, that's the symbol - BITW for the Bitwise 10 Crypto Index Fund. I'm a big fan of this fund and Bitwise. I'm an investor in both the Fund and in Bitwise itself.
The BITW is a fund that invests in the top 10 digital assets. Bitcoin and Ethereum are the two largest, and then there are eight others that are the next eight largest by market cap. These ten represent about 80% of the entire market of digital assets. So it's kind of like the S&P 500 of digital. So it's simple, easy to do. Bitwise does all the work for you of buying those coins, rebalancing them on a monthly basis. It's very simple and easy to deal with. There are two ways to go about buying it. Number one, as you noted, you can go directly to Bitwise, but if you do this, you have to be an accredited investor. This is because of the SEC rules. An accredited investor is somebody who has a $200,000 income, $300,000 if you're married or a net worth of $1,000,000. And you can't count your home in that math. Well, that means only the richest of Americans can qualify as an accredited investor. Only the richest Americans are able to buy the BITW investment directly from Bitwise.
And even if you do qualify, do you really want to invest $25,000? That's a lot of money in one investment. So even if you can buy it, you mean even if you're allowed to buy it as an accredited investor, that doesn't mean you want to invest that much money in a single one fund. So that's a turnoff and that is frankly a limiting issue for a lot of people. Now, if you're very wealthy, $25,000 no big deal. You can easily do it, and that describes the people who do invest in the fund directly from Bitwise. But what about everybody else? What about those who are not accredited or those who simply don't want to invest $25,000 all at once in a single investment? You can go to the brokerage community where you can buy BITW in the open marketplace.
Investing in BITW Through Your Brokerage Account
You don't need to be an accredited investor and you don't need to invest $25,000. You can invest 100 bucks if you feel like it. Very simple, very easy. The problem is the only way to do this in the open marketplace is to go through your brokerage account. And that means your brokerage firm has to have this investment on their list of available choices. And as you've described, between Edward Jones and JP Morgan, you're saying that they don't have it on their list and they're not going to let you buy it.
Well, then you need to go to a broker that will say yes, and I'll name one: Schwab. That's where I buy it. So open an account at Schwab, which you can do online, and you can just enter BITW in the transaction box and you can buy it just like you can buy any other stock. So simple, easy, very low investment amount, whatever amount you choose. No big deal. I'm amazed that big, huge firms like Edward Jones and JP Morgan are saying no to their customers. All they're doing is forcing you to go to their competitors. I don't get it. It's all the SEC's fault. And the firms need to have a Bitcoin ETF that they can make available to their clients. And in the meantime, until they do, they should simply make BITW available to you on their accounts. There's no reason for them not to. So if you can't get it at your brokerage firm, go to Schwab.com and buy it from them.
Michael: Well, thank you very much, Ric. I really appreciate that. That's great information and I'll do that.
Ric: Well, it's my pleasure. And by the way, if you're opening a brand new account at Schwab, if you're a brand new investor, they've got this really cool deal that I've in fact, talked about here on the show from time to time. Schwab, of course, is a sponsor here of this program. They offer a starter kit for people who are getting brand new into investing. Just go to Schwab.com/StarterKit.
Michael: Great. I will do that. Thank you very much.