Falling the collapse of cryptocurrency broker FTX and the ongoing contagion that’s wreaking havoc on the digital assets landscape, calls are escalating for more regulation of crypto. Add the CFP Board to that group.
The board oversees certified financial planners and the “CFP® Professionals Regarding Financial Advice About Cryptocurrency-Related Assets.” The Board acknowledged it has been fielding questions from members regarding the dissemination of financial advice pertaining to digital assets.
Indeed, the Board made clear that as outlined by its code of ethics and standards of conduct, crypto advice is similar to that of advising clients on traditional asset classes, meaning that CFPs take on an important fiduciary duty.
“The Notice identifies relevant provisions of the Code and Standards, including the Duty of Competence, the Fiduciary Duty, the Duty to Provide Information to a Client, the Duty to Comply with the Law, and Duties When Selecting, Recommending, and Using Technology, as well as considerations that arise under the Financial Planning Practice Standards, and discusses how they apply to cryptocurrency-related assets,” according to the CFP Board.
The Board clearly stated that its code of ethics neither prohibits nor encourages CFPs from providing crypto-related advice. However, the Board stated that it is advisable that CFPs discussing crypto with clients be knowledgeable of the asset class and the related risks.
“A CFP professional must be competent to provide that Financial Advice and must consider the particular attributes, risks, and uncertainties that cryptocurrency-related assets present when providing that Financial Advice,” added the Board.
The Board also pointed out that regulatory agencies, including the Department of Labor (DOL) and the Financial Industrial Regulatory Authority (FINRA), are expressing concern regarding financial planners integrating crypto into retirement plans.
Another issue mentioned by the Board is that the sheer amount of digital assets on the market today makes it difficult for CFPs to develop adequate mastery of the asset class. Additionally, the rapid proliferation of digital assets, many of which aren’t credible, doesn’t always arrive with enough relevant information to help investors and advisors make informed decisions.
“The lack of information about cryptocurrency-related assets also presents concerns. The information that a CFP® professional needs to provide Financial Advice may not be available. Furthermore, the information that is available may be limited. In some circumstances, a CFP® professional’s inability to obtain material information will prevent the CFP® professional from providing the Financial Advice,” concluded the Board.
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