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CFP Board Publishes New Crypto Guidance for Advisors


When providing financial advice on cryptocurrencies, certified financial planner (CFP) professionals have fresh guidance from the CFP Board. The governing organization published a notice recently in response to questions about applying the CFP Board’s “Code of Ethics and Standards of Conduct” to advice on cryptocurrencies and cryptocurrency-related assets. (CFP professionals commit to following the “Code and Standards,” which includes duties related to competency and ethics.)

While CFP professionals aren’t barred from – or required to – offer advice on crypto-related products, there are certain duties they must follow. Here’s what advisors should know.

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CFPs Must Be Competent When Providing Crypto Advice

CFP Board Published New Crypto Guidance for Advisors

As part of earning their credential, CFP professionals commit to a “duty of competence.” For advisors providing financial advice on crypto-related assets, that means having the relevant knowledge to understand those products and the skill to apply them to a client’s specific financial situation.

Understanding crypto assets may require certain specialized knowledge and education. Sometimes, the facts and materials needed to understand, say, a crypto asset’s performance may not be readily available or may change quickly.

Financial advisors lacking competence in this area have a few options. They can:

  • Become competent
  • Gain the assistance of – or refer the client to – a professional whom the financial planner has “reasonable basis” to believe is competent
  • Limit or terminate the engagement with the client

“A CFP professional interested in becoming more competent about cryptocurrency-related assets should consider further education about the topic through continuing education courses,” the CFP Board says.

CFPs Must Act With Care When Providing Crypto Advice

CFP Board Published New Crypto Guidance for Advisors

It may come as little surprise that the fiduciary duty applies to financial advice related to crypto assets. But the CFP Board also highlights that CFP professionals must adhere to the related “duty of care” as well.

The duty of care “requires a CFP professional to act with the care, skill, prudence and diligence that a prudent professional would exercise in light of the client’s goals, risk tolerance, objectives, and financial and personal circumstances.”

When exercising this duty, advisors should know that cryptocurrency-related assets may present heightened risk, uncertain regulatory outlooks, the potential for loss and other challenges. Crypto hurdles that CFPs should understand include these:

  • Clients’ risk tolerance and capacity for risk
  • Valuation challenges
  • Monitoring frequency and limitations of monitoring services
  • Tax-related issues
  • Evolving regulatory requirements
  • Custody and storage and risk of theft or loss

CFPs Must Adhere to Additional Duties When Providing Crypto Advice

The CFP Board also highlights that professionals must comply with the law, provide information to clients on crypto costs, exercise care in choosing and recommending crypto-related technologies and follow client instructions.

“The same standards apply to cryptocurrency-related assets that apply to all financial assets,” the CFP Board concludes. “However, cryptocurrency-related assets have particular attributes and present heightened risks.”

Bottom Line

CFP professionals are not barred from, or required to, provide financial advice on crypto assets. But they should be aware that these financial products may carry significant risks and present challenges. The CFP Board’s notice outlines how its code of ethics applies to financial advice concerning crypto assets and provides extra context on these unique financial vehicles.

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