Digital Advisory Firm Betterment Enters Crypto With Makara Acquisition

Digital investment advisor Betterment has acquired robo-advisory firm Makara that offers cryptocurrency. The acquisition's terms were not disclosed. Betterment, which is the biggest independent digital advisor in the United States, pioneered robo-investing—an industry that grew during the pandemic

The company's CEO Sarah Levy stated that Makara was unique because it combined crypto offerings with guidance and ease-of-use in its interface. "Makara is to crypto today what we are to traditional investing, since pioneering robo-investing a decade ago," she said.

Key Takeaways

  • Digital advisory firm Betterment has acquired crypto robo-advisory startup Makara.
  • The acquisition will help Makara achieve scale for its crypto offerings and integrate crypto into Betterment's portfolio.
  • Betterment President Mike Reust says the acquisition will help improve outcomes for crypto investors because it tailors their investments in the asset class to specific financial goals and objectives.

"Combining our crypto expertise with Betterment's scale will accelerate the growth of the platform with both retail investors and financial advisors," said Jesse Proudman, CEO of Makara. The startup launched with 20,000 customers and $1 million in assets under management last June. Betterment has $33 billion in assets under management, as of this writing, and it had nearly 700,000 customer accounts in September 2021.

A Case for Responsible Crypto Investing  

While many millennial-focused apps, like Robinhood, were quick to integrate cryptocurrencies into their offerings, Betterment took its time in coming to the asset class. Crypto's price burst and rising popularity during the pandemic became an impetus for the company to make the acquisition. "We've seen crypto emerge, and you can think of it as an asset class now,” said Mike Reust, president of Betterment. "It is just not reasonable for us to have a story about not having crypto [on our platform]."

The acquisition should help Betterment garner new customers interested in making cryptocurrency investments. "We will help manage large, diversified crypto portfolios," explained Reust, highlighting the company's advisory business that includes custodian and financial advisory firms as clients.

Reust noted that current crypto investment offerings in the market are "unguided." He continued, "What does Coinbase do to help you pick between coins? They don't do much to guide you," referring to Coinbase Global, Inc. (COIN), North America's biggest cryptocurrency exchange. The exchange's site has educational videos and articles but offers little by way of personalized advice for investors. Reust compared the offerings on Coinbase's site to a buffet that might end up confusing investors.

According to Reust, the Makara acquisition will improve the outcomes of a Betterment portfolio by helping users diversify into cryptocurrencies in a "responsible manner." What this means is that their platform will help investors move away from making random crypto forays—triggered by price changes and breathless news coverage of the asset class—to a more structured schedule of investments through robo-advisors and based on their financial goals and objectives.

But making responsible investments is difficult in a crypto landscape littered with uncertainties about many things, from regulation to taxation. Reust makes the case that Betterment's robo-advisory platform will help take the uncertainty out of crypto investments by automating and integrating changes, as and when they occur. "When tax laws [for crypto] change, we will take on that burden and do it for you," he said. That said, he also concedes that the rapid flow of news occurring daily in cryptocurrency is something that investors should be "mindful about" when making their investments.

Reust said the Makara acquisition will be completed later this year.

Article Sources

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  1. PRNewswire. "Betterment Enters the Cryptocurrency Market by Acquiring Makara." Accessed Feb. 9, 2022.

  2. Decrypt. "Crypto Robo-Advisor Makara Launches With SEC Greenlight." Accessed Feb. 9, 2022.

  3. Betterment. "Betterment Raises $160 Million in Growth Capital." Accessed Feb. 9, 2022.

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