Tyrone Ross Jr. | NobleBridge Wealth
Safety and security issues of investing in cryptocurrencies
Tyrone Ross is a Managing Partner at NobleBridge Wealth Partners, a financial advisory firm. Tyrone has more than a decade of experience, working at firms including Morgan Stanley and Merrill Lynch, in the financial services industry. We recently sat down with Tyrone, who will be speaking at our Digital Asset Strategies Summit (Oct. 16 – 17 – Dallas), as he shared with us his thoughts regarding the safety/security issues of investing in cryptocurrencies.
Digital Asset Strategies Summit: Can you discuss the importance of holding your coins in a personal digital wallet as opposed to on an exchange?
Tyrone Ross: If you leave your coins on an exchange you are extremely vulnerable to getting hacked and having your coins stolen. There is a term in crypto that says, “if you don’t own the private keys, you don’t own the coins.” A personal wallet gives you complete control over your coins privacy, security and utility. This is also core to the mission of crypto which is for everyone to function as their own bank.
Digital Asset Strategies Summit: Can you explain the difference between cold storage and hot storage?
Tyrone Ross: To keep it simple the difference between cold and hot storage is simply whether coins are stored online or offline. Cold storage is the most secure as they are offline and hot storage means they are still online and connected to the internet. This is why everyone who holds cryptocurrency is encouraged to store their coins in a hardware wallet which is the most secure form of cold storage. With that said for those not savvy enough to know the ins and outs of the technology, Coinbase holds 99% of their customers in cold storage.
Digital Asset Strategies Summit: Can you discuss how Coinbase becoming a licensed broker and Circle obtaining a federal banking license will impact the market for digital assets?
Tyrone Ross: As someone who recommends both Coinbase and Circle to clients I was very happy to see this news from both companies. There are a few things that are keeping crypto from gaining mass adoption including regulation and custody. As these companies continue to develop and become more like traditional brokers and banks it will lead the way for large institutions to enter the space. It also will allow them to go beyond just brokering the sale of coins, but to provide holistic financial solutions to clients. Personally, I am very impressed with Circle and their full suite of services including the Circle Pay app.
Digital Asset Strategies Summit: Fidelity has recently posted job openings hinting at their intention to get into digital currency offerings. How would Fidelity’s entrance into the space impact the landscape?
Tyrone Ross: As of right now clients are able to see their Coinbase account through the Fidelity portal and have the ability to buy and sell as well. As one of the larger legacy institutions with an established brand it will go a long way towards giving crypto credibility. If consumers and other institutions see that Fidelity is entering the space they will follow suit and begin to build out their platforms as well. Ultimately this means more money going into the space so that the very smart engineers and developers have the tools to build the architecture to make the retail investor comfortable with embracing crypto as an asset class.
Digital Asset Strategies Summit: Can you discuss some of the misconceptions advisors have about crypto?
Tyrone Ross: Well where to begin with this?! First of all many advisors and the investment community in general believes that bitcoin is bad, but blockchain is good. I think it’s important to understand that they are inherently inseparable. To embrace blockchain is to embrace bitcoin and vice versa. The second thing you always hear is bitcoin is used for all types of nefarious activity. There has been this stigma since the whole Silk Road fiasco that bitcoin is used to launder money and pay for criminal activity. If you were to do any of these things you probably shouldn’t use an open blockchain to do it! My guess is they would use cash if they were opting to remain anonymous. You also hear a lot about tax implications and rightfully so. Do the exchanges provide tax reporting? Are the coins securities? Are they commodities? The SEC has started to give some clarity around whether bitcoin or ether are securities (they aren’t) and Coinbase has started to provide tax reporting statements and tax calculators for customers. There are also CPA’s that work specifically with cryptocurrency, so advisors should expand their center of influence to include accountants who have an expertise in this area.
Digital Asset Strategies Summit: Thanks Tyrone. We look forward to hearing more of your thoughts at the Digital Asset Strategies Summit October 16 – 17 in Dallas.