Analysis
August 9, 2024 9:26 PM
John Reed Stark, the former head of internet enforcement at the U.S. Securities and Exchange Commission (SEC), has voiced serious concerns over Morgan Stanley's recent move to allow its 15,000 financial advisors to promote cryptocurrency investments.
Stark, now president of John Reed Stark Consulting, a cybersecurity firm, took to social media platform X to express his apprehensions about the potential risks involved for both retail investors and the advisors themselves.
Morgan Stanley has reportedly permitted its advisors to offer shares of two spot bitcoin exchange-traded funds (ETFs) to select clients.
These include Blackrock’s Ishares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC).
Stark warns that the risk associated with crypto-asset investments is immense and could jeopardize the Certified Financial Planner (CFP) credentials of the advisors if they fail to comply with regulatory standards.
The CFP Board, which oversees the CFP credential, updated its Sanction Guidelines, Fitness Standards, and Procedural Rules as of July 1.
These updates emphasize the need for CFP professionals to exercise extreme caution when providing advice on cryptocurrency-related assets.
Stark stresses that advisors must be competent in understanding the unique risks and uncertainties of these assets, including potential future regulations.
Stark concludes with a stern warning to CFPs considering promoting crypto-assets: "Fail not at your peril."
He highlights that the CFP Board’s Enforcement Department is vigilant and can easily track advisors' activities.
Stark advises against falling for the "get-rich-quick" allure of crypto-assets, urging advisors to protect their careers by steering clear of these high-risk investments.
Disclaimer: Backdoor provides informational content only, it is not offered or intended to be used as legal, tax, investment, financial, or other advice. Investments in digital assets involve risk, and past performance does not guarantee future results. We recommend conducting your own research before making any investment decisions.