After Super Bowl ad blitz, it may be time to pump the brakes on crypto enthusiasm

Cryptocurrency made its Super Bowl debut on Sunday with an all-out advertising blitz that put more pressure on consumers’ wallets than the seven sacks the Los Angeles Rams delivered on Cincinnati Bengals quarterback Joe Burrow.

There was Coinbase’s mysterious bouncing QR code — eliciting nostalgia for the days when a DVD screensaver could be the best form of entertainment available — and Larry David of “Seinfeld” and “Curb Your Enthusiasm” fame starring in a spot for FTX Crypto Exchange that compared crypto-skepticism with those who doubted other landmark innovations throughout history. Then there was Crypto.com featuring NBA star LeBron James telling his 2003 self, “If you want to make history, you got to call your own shots,” before flashing the tagline “fortune favors the brave.”

It was a testament to just how much private equity and venture capital money has flown into these companies, which need to grow beyond early adopters and reach a broader audience.

But it was also a missed opportunity for a wealth management firm to advocate for building long-term investing and financial planning, rather than some bold new adventure that only favors the brave few. The only “traditional” financial services company with a commercial was E-Trade, the digital brokerage now owned by Morgan Stanley, bringing back its talking baby character of yore to rescue investors taking financial advice from memes.

As XYPN co-founder Michael Kitces pointed out, there was some irony to the nostalgia (an escapable theme of the entire Super Bowl) as E-Trade first introduced the baby in 2008 during a previous boom in retail, do-it-yourself day trading that has many analogues to the recent meme stock boom.

Some were dismayed with the messaging, which played on consumers’ fear of missing out on a historical investment opportunity rather allaying fears about security or showing how the asset class can fit within a holistic investment strategy or financial plan.

The reality is the asset class faces issues far beyond its history of volatility. Cryptocurrency company BlockFi Lending agreed to pay $100 million to settle charges with the SEC that it violated investor-protection laws, according to the Wall Street Journal. The Justice Department seized more than $3.6 million of cryptocurrency stolen in a hack and arrested two people — both big crypto advocates on social media — for allegedly trying to launder the money. The NFT market has become a “mountain” of fraud, according to the IRS; Crypto.com approved $35 million in fraudulent transactions last week; and a hacker was able to make off with $326 million in stolen Ethereum and Solana.

And that’s all in just the last few weeks.

“The good thing about all this flagrant NFT and crypto fraud is that it’s getting nearly impossible for them to credibly defend that any of this is actually subversive to power,” tweeted mid-90s pop-punk band Eve6, to continue the nostalgia theme. “It’s literally just the most crass, exploitative capitalism.”

This hasn’t stopped an increasing number of financial advisors from embracing cryptocurrency for client portfolios. Digital advice company Betterment, which long preached the value of managed accounts over picking stocks, will soon let clients allocate as much of their portfolios as they want toward crypto.

Nor has it stopped the general fintech community from celebrating every cryptocurrency, NFT, digital alternative investing and DeFi (decentralized finance) update without asking if any of this is actually good for retail consumers. To paraphrase a movie that also received a nostalgic reference in a Super Bowl commercial: we’ve been so preoccupied with whether or not we could offer crypto, we haven’t stopped to think if we should.

That doesn’t mean advisors should completely ignore digital assets. They are being marketed to clients so heavily that advisors need to be able to have intelligent conversations, answer questions, provide guidance to clients that want to invest and incorporate them into a financial plan. Companies like Onramp, Flourish Crypto and Betterment for Advisors are working to make this happen.

No one wants to feel FOMO for missing a huge investment opportunity, especially not financial advisors. Cryptocurrency represents a new, exciting way for advisors to engage with clients, offer new billable services or increase assets under management.

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But maybe let’s pump the brakes a bit on the rampant cheerleading. These companies already have ultrawealthy celebrities willing to urge everyday Americans to invest their savings in a historically volatile product; PR and sales teams getting the crypto platforms out to reporters and customers; and social media influencers happy to create free content for them.

Could cryptocurrency explode and create untold wealth for millions of people? Maybe. But it’s worth keeping in mind which other industry spent millions to make its Super Bowl debut — online gambling.