Retail investors use automated platforms to invest in different portfolios, but can you buy Bitcoin with robo-advisors in Singapore?
Remember the days when robo-advisors were seen as a crutch for lazy investors? Those days are fading fast. Today, these automated investment platforms are steadily gaining traction as a convenient and stress-free way to grow your wealth.
Indeed, robo-advisors in Singapore now offer pre-built portfolios and automated investing strategies that bring your investment game up to speed. But do these computerised platforms provide Singaporeans access to digital asset classes such as cryptocurrencies?
What are Robo Advisors?
Robo-advisors are digital investment platforms that use algorithms to manage your portfolio. They take the guesswork out of investing by creating a personalised investment plan based on your risk tolerance and financial goals.
Once you set your parameters, the robo-advisor manages the rest, automatically rebalancing your portfolio and making investment decisions based on market conditions.
Here’s how robo-advisors differ from traditional investing:
- Accessibility: Robo-advisors typically require lower minimum investments when compared to traditional wealth managers, making them accessible to a wider range of investors.
- Automation: Robo-advisors automate the investment process, freeing you from the burden of actively managing your portfolio.
- Low Fees: Robo-advisors charge lower fees compared to traditional wealth managers.
What are the Pros of Robo Investing?
Robo-investing offers several advantages for both new and seasoned investors:
- Convenience: Robo-advisors provide a simple and convenient way to invest. They manage the heavy lifting, allowing you to focus on your long-term goals.
- Diversification: Robo-advisors automatically diversify your portfolio across multiple assets, reducing risk exposure.
- Discipline: These platforms remove the emotion from investing, encouraging you to stick to your long-term investment strategy.
- Affordability: Robo-advisors typically charge lower fees compared to traditional wealth managers, making them a more cost-effective option.
What are the Cons of Robo Investing?
While robo-investing offers a wealth of benefits, there are also some downsides to consider:
- Limited Control: Robo-advisors offer less control over your investments when compared to traditional investing methods.
- Less Customisation: These platforms offer a limited range of investment options compared to a human financial advisor.
- Not Suited for Complex Needs: If you prefer more complex financial instruments, or have a higher risk tolerance, a robo-advisor may not be the best fit for you.
Can You Buy Bitcoin with Robo Advisors in Singapore?
Singapore takes a stringent approach to cryptocurrency regulations. Under the Payment Services Act (PSA), access to cryptocurrencies is deemed as digital payment token (DPT) services, and it covers any service facilitating the exchange of digital payment tokens, or its buying and selling.
Platforms that seek to offer DPT services will need to obtain specific licences to operate while following strict rules. These include:
- Implementing AML/CFT procedures such as risk assessment and mitigation, ensuring processes for customer due diligence, and transaction monitoring.
- Avoiding any form of advertisements or promotional materials of digital assets to the general public.
- Developing appropriate compliance management arrangements while maintaining an independent audit process
Currently, investors seeking to buy or sell cryptocurrencies can only do so through a list of approved crypto exchanges in Singapore. These platforms have a thorough Know-Your-Customer (KYC) process that adheres to the regulations in Singapore.
However, there is a feasible alternative for investors who seek exposure to major cryptocurrencies like Bitcoin without having to purchase the digital asset. The U.S. Securities and Exchange Commission recently approved the first 11 Bitcoin Spot ETFs (Exchange Traded Funds) in January this year, and investors can invest in these ETFs through certain local robo-advisors.
What are ETFs? ETFs are investment vehicles that track a basket of underlying assets, such as stocks or commodities. Bitcoin Spot ETFs allow investors to gain exposure to the price movements of Bitcoin without the need to purchase and hold the actual cryptocurrency themselves. This eliminates the risks associated with storing and securing Bitcoin, and opens doors for wider Bitcoin adoption.
Robo Advisors in Singapore that Offer Bitcoin ETFs
While direct purchase of Bitcoin is not available via robo-advisors in Singapore, there are some platforms offering access to Bitcoin ETFs. Here’s a closer look at two leading contenders.
StashAway
StashAway’s crypto-related service, StashAway Reserve, is currently only available to accredited investors. These are individuals who meet the requirements set out by the Monetary Authority of Singapore (MAS) and typically have a high net worth, or a proven track record of successful investing.
For qualified investors, StashAway Reserve allows access to crypto exposure through two reputable, institutional-grade crypto ETFs to provide balanced exposure to both Bitcoin and Ethereum:
- Fidelity Wise Origin Bitcoin ETF (FBTC)
- CI Galaxy Ethereum ETF (ETHX.U)
Other details regarding crypto exposure through StashAway Reserve:
- You can allocate a small portion of your existing General Investing portfolios (including SRS-funded ones) to crypto based on your chosen risk level.
- StashAway portfolios with crypto exposure carry a higher StashAway Risk Index (SRI) compared to those without.
- Depending on your StashAway Risk Index (SRI), your portfolio will receive between 1% and 12% exposure to Bitcoin and Ethereum through these ETFs.
- StashAway allows you to seamlessly add crypto exposure to your existing StashAway General Investing portfolios. Your portfolio will be automatically rebalanced to include the crypto ETFs.
- Crypto-exposed funds are held in a separate trust account with a custodian bank, Saxo Capital Markets Pte Ltd.
Syfe
Syfe offers a different approach to crypto exposure through its Syfe Brokerage platform. The platform allows you to directly trade a variety of assets, including the top 5 Spot Bitcoin ETFs. Here are some key features of Syfe Brokerage:
- Facilitates effortless trading of stocks, ETFs, and REITs, both locally and internationally.
- Commission-free trading on US stocks
- Low fees for Singapore Exchange securities
Through the Syfe Brokerage platform, you can invest in the following list of Bitcoin ETFs available:
- Grayscale Bitcoin Trust (GBTC)
- iShares Bitcoin Trust Registered (IBIT)
- Fidelity Wise Origin Bitcoin Fund (FBTC)
- ARK 21Shares Bitcoin ETF (ARKB)
- Bitwise Bitcoin ETF Trust (BITB)
Having access to a wider range of Bitcoin ETFs allows for a more customised investment strategy.
Robo Advisors Let You Invest in Bitcoin ETFs, Not Bitcoin Itself
While robo-advisors in Singapore don’t currently offer direct investment in Bitcoin, they do provide access to Bitcoin exposure through ETFs. It’s important to remember that even this access may be limited for some investors, as robo-advisors like StashAway limit their crypto ETFs to accredited investors only.
However, the approval of Bitcoin ETFs does pave the way for ETFs around other major cryptocurrencies such as Ethereum. This means that Ethereum ETFs may soon follow suit, offering investors more avenues for exposure to the cryptocurrency market.
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