Stash adds crypto offering to its ‘Smart Portfolio’

The news

On Thursday, Stash announced it was adding a new crypto offering as part of its Smart Portfolios, an automated investment solution that determines the best way to invest users’ funds, depending on things like preferences and income.

The news comes after what was a major year for crypto – with certain digital tokens reaching all-time highs in value and the crypto market value surpassing $3 trillion at one point. 

On Stash’s end, the company has seen increased demand from its users to invest in crypto. 60% of its users say they want to invest in cryptocurrency. 

What does this mean?

The news marks the stance Stash is taking regarding crypto – expressing the belief that investing in digital currency is something that’s smart to do in the long run.

Doug Feldman, Stash’s chief investment officer, points out that diversified bond ETF holdings are becoming a riskier asset class in the face of inflation and changes in interest rate. While crypto is still volatile, the company believes that exposure could benefit investors in the long run, as crypto popularity continues to grow.

“We believe wholeheartedly that some crypto exposure benefits investment portfolios, and that every person should have some amount of exposure,” said Feldman. “We believe this to be true for all, and not just for a certain subset of the population, such as the wealthy or groups historically known to be more brazen, or risky, investors.”

Smart Portfolios, which has almost 400,000 open accounts, will now include cryptocurrency exposure through custom trusts from Grayscale Investments focusing on Bitcoin and Ethereum.

According to Stash’s press release, the company determined these currencies to be safest to invest in long-term, with Bitcoin having potential as a store-of-value asset, and Ethereum playing a big role in the evolution of a decentralized digital economy. 

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“The decision to add crypto exposure to Smart Portfolio came from tremendous research on the part of the Stash Investment Team,” said Feldman. “It became clear to us that adding a small exposure to the two largest cap digital currencies, Bitcoin and Ethereum, could dramatically improve the risk adjusted return profile of the portfolios.”

As for choosing to work with Grayscale Investments, Feldman said Stash determined this to be the safest way to address the risks surrounding crypto. 

“The biggest challenge in implementing the change was in how to add the crypto exposure within the confines of a set-it-and-forget-it, discretionary managed account,” said Feldman. “There was no easy way to directly buy the cryptocurrencies for our customers, so we had to evaluate other options. We determined that the best way to deliver the exposure was through two trusts managed by Grayscale Investments.”

The big picture: Is crypto going from risk to staple in investors’ portfolios?

Earlier this month, N26 co-founder Max Tayenthal admitted the company should have put more focus on developing trading and crypto earlier in the cycle. Just after acknowledging the mistake, the German challenger bank announced it was in the midst of developing crypto trading services. 

Meanwhile, Square continues to rock around the Block with crypto, with Cash App announcing it’s integrating with Lighting Network to allow its US users to send Bitcoin across borders for free.

Finally, in its latest earnings call, Robinhood said it brought in $51 million in revenue from crypto trades. And while the company says it’s been holding off adding new coins or currencies for now under regulatory scrutiny, customers are continuing to demand more crypto investing options.

As for Stash -- a company that prides itself on slow and steady growth and long term investing –- its newfound focus on crypto could say something about the evolution of the digital asset market going forward.