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“The next wave of investors into digital assets, whether they’re retail clients or the RIAs, also have somewhat of a different mental model. They may or may not care about the ideology or subscribe to the ideology of the Bitcoin white paper, but they are looking at this as an investment from a very pragmatic viewpoint, which is store of value, potentially uncorrelated, the whole narrative of digital gold. And I think that’s exciting to see that we’re starting to create a big tent and broaden the type of market participants that are starting to engage with this asset class.”
— Sunayna Tuteja, Head of Digital Assets & DLT, TD Ameritrade
As Head of Digital Assets, Sunayna is responsible for building a scalable blockchain and crypto practice within TD Ameritrade. This rapidly growing practice is inclusive of partnerships, investments and products to harness the growing power of distributed ledger technology. Prior to this position, Sunayna launched a strategic partnerships & frontier tech practice at TD Ameritrade, inclusive of leading an entrepreneurial “tiger team” to build the next generation of products, experiences and business models needed to break down barriers to investing and engage more people on the platforms they use every day. Her team was responsible for delivering industry-first partnerships and products with cutting-edge startups and leading global technology companies including Apple, Amazon, Google, and Tencent.
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Companies & People Mentioned
Topics Covered in this Episode
- Transition into Digital Assets [03:16]
- Bitcoin = Digital Gold? [10:11]
- The Halvening [12:06]
- Bitcoin Apathy is No Longer Kosher [19:27]
- Innovation at TDA [25:02]
- Lightning Round [29:37]
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Complete Episode Transcript
Craig: Thank you all for joining me in the World of WealthTech. This is the WMToday podcast and I’m your host, Craig Iskowitz, and I run a wealth management consulting group called Ezra Group. We help firms make better technology and business decisions through our research and advice. On this podcast, I speak to some of the smartest people in the industry who are on the leading edge of technology and innovation.
Craig: I was very happy to have my guest for this episode, Sunayna Tuteja from TD Ameritrade, because I’ve spoken to her before on the WMToday podcast. She was a Winner of WealthTech almost exactly a year ago. You can listen to that interview here, which is a much longer, more personal interview about how she got into the industry and how she’s transcended to be where she is in the industry. This interview is more focused on digital assets, which is her current job. I really liked this interview, I’m a blockchain and cryptocurrency enthusiast myself so I’m always interested to talk to somebody in the industry, somebody know knows this commodity and how it can impact wealth management. So spending some time talking to Sunayna and about how the investors are thinking about it and how TD Ameritrade is thinking about Bitcoin and crypto. How RIAs might think about it, and how other advisors, broker dealers, might deal with cryptocurrency. Also how the market is impacting crypto and how the pandemic is impacting it as well. So lots of good stuff, let’s get started. And like to welcome to this episode of the wealth management today, podcast Sunayna Tuteja, Head of Digital Assets for TD Ameritrade. Hey, Sunayna, how you doing?
Sunayna: Hey Craig, it’s wonderful to be back talking to you again.
Craig: Yes, you are back, you’ve been on the podcast before as a Winner of WealthTech last year.
Sunayna: Yes. It seems like an eternity ago considering recent months are an aggregate of weeks, not days.
Craig: It seems like we’ve lived many years in just the past few months. So how are you getting along working from home?
Sunayna: I think like you, prior to being grounded, I spent a lot of time on the road. So working outside the office is not a new phenomena, but the adjustment that I’ve had to make is being grounded and being in one place every single day, which is a very alien concept to me when you’re on the road all the time, hopping around time zones. There’s days when you wake up and you’re like, wait, what city and what time zone am I in? And now for the last 75 days I’ve been the same city, same place, same routine. So it’s an alien concept, but we’re powering through this adventure. How about yourself?
Craig: Oh, doing well. My business has always been remote, always been virtual for the last 15 years. All my employees and staff are all over the country, so it’s no change for us, which is a good thing. So we haven’t had any disruption and we’ve been able to keep functioning at a high level and working with our clients who are broker dealers, banks, asset managers, and FinTech firms.
Sunayna: Excellent. I have been in awe to see financial services mobilize so quickly and make the transition. I think it speaks volumes in terms of the efforts that people have put together, but also looking at TD Ameritrade, one of the things we were very proud of is in a matter of days, we were able to transition over 10,000 of our associates to be able to work from home. And as you know, in a regulated space where your employees are licensed, there’s record keeping and call recording all of that infrastructure that has to move, but also helping to transition our millions of retail clients, but also our RIA clients to start engaging on digital first basis. When branches are closed or call centers, you’re migrating everybody. And doing all of this when the markets were in times of turmoil, one of the things that was validating is all the bets that we’ve been making over the last few years in terms of emerging technologies or investments in cloud, and mobile, all of that was a confluence of all of that coming together that enabled us. And I would hazard a guess that a lot of our colleagues in financial services to make this transition the way we’ve had to.
Transition into Digital Assets
Craig: Indeed. So when we last spoke, you were still the head of Strategic Partnerships and Emerging Technologies. One of the things you spoke about, and I loved some of your speaking engagements and hearing you talk at conferences about emerging technologies, one of those emerging technologies was blockchain and cryptocurrencies, and now that’s all you do. You’re now Head of Digital Assets. Can you talk about that transition and why you moved into that space?
Sunayna: Yeah, for sure. For better or for worse, I decided to go down the crypto rabbit hole full time. It was an amazing opportunity and I think again, speaks to the progressive mindset at TD Ameritrade and I’m super grateful I work at an organization that’s an incumbent on Wall Street, that embraces not just blockchain, but also Bitcoin which still seems like such a contrarian saying, and you know, part of my emerging tech and partnership portfolio included blockchain. So, as we were commercializing different technologies and forming partnerships with big tech firms or startups or VCs in our quest to really commercialize things, solve problems and break down barriers in financial services, blockchain was always a part of that, but about nine months ago or so we came to the realization that there’s a long runway when it comes to digital assets that behooves us to really put more of a myopic focus in terms of time, money, people, and decided as hard as it was, you know how much I loved my team, I gave up the rest of my portfolio and I had amazing members of my team who were groomed to take it to the next level and then really started anew to build a dedicated practice that was focused on digital assets and DLT and happy to double click in terms of what encompasses that practice and how we’re thinking about it.
Craig: So let’s talk about how TDA is embracing blockchain. Can you give me some ways that they’re doing that?
Sunayna: I think the way we’re looking at this is across the spectrum, right? Inclusive of the technology of blockchain, but also the emergence of the asset class that is digital assets. As with any new technology, you have to experiment quite a bit before you find that killer app. Just like with the internet, the killer app actually started with email. It was really the adoption and the network effect that email brought to bear that gave rise to the ubiquitous proliferation of the internet. With blockchain while there are some really fascinating use cases from gaming to use cases in traditional finance, around automation and settlement, the reality is the killer use case of blockchain today is digital assets, interchangeably called cryptocurrency. This actually works out very nicely for us because for 40 years, we’ve been in the business of bringing Wall Street to Main Street and building seamless on-ramps for investors to trade and basket tap into traditional capital markets. So we’re able to really bring a lot of that ethos and now start to apply it to blockchain, the technology, but also in support of the rise of this new asset class.
Craig: So can people buy crypto through TD Ameritrade?
Sunayna: Yeah, we were actually one of the first in our category to enable futures trading. So we do offer Bitcoin futures trading in partnership with CME, and we’re working on a few other on-ramps as part of our product development roadmap, but currently as TD Ameritrade clients can access the crypto markets using futures via CME.
Craig: Do you have any information on the volumes there?
Sunayna: We haven’t reported the volumes publicly, but what I will say is we continue to see a steady growth quarter after quarter in terms of the adoption. The other thing that’s really neat about seeing this firsthand adoption is we’re also able to glean a lot of important lessons in terms of consumer, behavior and appetite. So I’ll give you an example. Coming into this role, now I’ve personally been obsessed with Bitcoin since 2012. I never thought that my job in traditional finance would one day intersect with my personal passion for Bitcoin. So my worlds collided for good –
Craig: You’re incredibly wealthy if you’ve bought Bitcoin since 2012. You’re just working because it’s fun to work.
Sunayna: I don’t know about that, but I too had the mindset that this is an asset class that is most likely to attract client segments that maybe skew on the younger side of the demographics, perhaps the Millennials. Right. But one of the things we saw with our futures product is sure, the Millennial clients are the first adopters, but interestingly, so are their parents. So that was a very important voice of the client and client behavior input that’s continuing to play an important role as we launch and build the rest of our roadmap.
Craig: So we’re seeing more Gen X buyers of your Bitcoin futures and Millennials?
Sunayna: Oh, absolutely. I think the other important distinction also is the next wave of investors into digital assets, whether they’re retail clients or the RIAs, also have somewhat of a different mental model. They may or may not care about the ideology or subscribe to the ideology of the Bitcoin white paper, but they are looking at this as an investment from a very pragmatic viewpoint, which is store of value, potentially uncorrelated, the whole narrative of digital gold. And I think that’s exciting to see that we’re starting to create a big tent and broaden the type of market participants that are starting to engage with this asset class.
Bitcoin = Digital Gold?
Craig: That brings me to another question. So there are people who thought of Bitcoin is digital gold, as a store of value, but there was also a large portion of people who are on the Bitcoin bandwagon who think Bitcoin should become more a payments processor. But no one’s really using it for that, the volumes I believe are very low in terms of people using Bitcoin as a form of payment. Would you agree with that, or do you see that just a matter of time before more people start using it for that?
Sunayna: That’s a really good observation, Craig. If you read the Bitcoin white paper, which I encourage your audience members to look up and read, it is after all the owner’s manual, in fact Satoshi’s initial thesis was really about Bitcoin being this censorship resistant payments network. One of the neat things about Bitcoin is if you look at the last decade and it’s really been a decade of existence for Bitcoin, the number of the narratives that have been ascribed to Bitcoin, it’s a payments network, it’s digital gold, it’s a safe haven asset, et cetera, et cetera. There are a lot of smart arguments that can defend each of those narratives, and I often joke in a way Bitcoin has become a Rorschach test, different people see the potential in it that they want to, which I think is very exciting. What I would say today, the use case that seems to prevail is the store of value, that digital gold narrative. There’s a lot of exciting work happening around payments, especially with Lightning and some of that innovation, which could hopefully make it. But right now the investment thesis and the digital gold narrative and thesis seems to be the one that’s superseding.
The Halvening
Craig: Let’s talk about some recent Bitcoin use and how it would impact the wealth management industry. Can you explain for the listeners what the Bitcoin halving was. Halving, being not to have, but halving us in cutting in half. So what was it about and why is that important for people who are interested in investing in Bitcoin?
Sunayna: Great question. So in mid-May, Bitcoin underwent this event called Bitcoin halving or halvening, as some people like to say. We’ll stick with halving, halvening is a little too Lord of the Rings for me so we’ll stick with halving. It is a quadrennial event, the last one being 2016 and prior to that in 2012. Largely the halving is a technical process. So what happens is the supply of Bitcoin that comes into circulation gets cut in half every four years. And this is built into the DNA, the code of Bitcoin, and it’s programmatic. What’s actually really positive and speaks to the resiliency of the Bitcoin network is despite what was happening in the world with COVID and the macro economic conditions, the halving took place as it was programmed in the code to take place which speaks a lot to the resilience of the network and the asset class. It is largely a technical event as I mentioned, it has a huge implication on the asset class, especially from a pricing perspective. And thus it was very much top of mind for us crypto nerds, but it also drove a lot of interest and awareness amongst consumers who were really looking at it.
Sunayna: One of the stats that was very powerful to me was the number of searches on Google this year about Bitcoin halving were 300% higher than the last halving, which was in 2016. So the reason these events are critical other than the price movement, which we can double click into, for us at TD Ameritrade, the reason we watch it closely is these events can serve as a catalyst to further expand the market participants. New people want to learn about it, want to get educated, and maybe for the first time invest in this asset class. So for me, these events are important cause it’s a formation of that big tent effect, and we definitely saw that at TD Ameritrade. Lots of interest from RIAs, from our retail investors, and just a lot of dialogue and education with them, which was really important and exciting.
Craig: What about the Bitcoin narrative that it was uncorrelated with the market and it actually fell with the market? How did that happen, why that happen and is that something that’s changed now, are we going to see more of a correlation with Bitcoin and it’s not going to be something you invest into to diversify?
Sunayna: You know what, that’s a very good argument and it’s a question I’ve been asked often, because one of the narratives, as you mentioned, that was put up for investing in Bitcoin was this potential notion of uncorrelated. And that narrative definitely was punctured when Bitcoin moved in tandem with the S&P when we saw the meltdown in the markets in March and into April. What I would submit, however, is the dataset is still very small. And what I mean by that is if you recall, Bitcoin Genesis was after the last big crisis we saw, which was the global financial crisis. It was in 2009 that Satoshi Nakamoto published the Bitcoin white paper, and throughout its life, Bitcoin has pretty much lived in an ongoing bull run, right? It’s never been stress tested. This was the first big macro event in its 10 year history where Bitcoin has truly been stress tested and been exposed to bear market conditions. So we definitely thought that narrative of being uncorrelated punctured, but I would say so did oil, right? So gold, gold was moving just as in tandem with the S&P and gold has had decades, if not centuries, to build up its treat credit of being uncorrelated or a safe haven asset. So I think we need a longer horizon to continue to stress test it. I’m not yet willing to give up on the narrative that Bitcoin can be uncorrelated, I just think it’s too small right now, it’s too nascent and we’ll need to look at it from a longer perspective.
Craig: You’re not willing to give up on it yet.
Sunayna: No. And I think, and there’s different narratives, right? I think different people come into back to my comment about it being a Rorschach tes,t there’s a lot of narrative validation or violation during these times as trust events. And there’s some things about Bitcoin that are proving out really well. One of those things is it’s starting to really gain traction on Wall Street of all places is Bitcoin becoming an investment as a hedge against inflation. You know, we saw Paul Tudor Jones publicly state that he and his hedge fund are now invested in Bitcoin, and he compared it to his thesis in the 1970s with gold. So I think different narratives continue to sprout, and then there’s narratives that maybe we have to say, Hey, that worked for awhile, but it’s not going to anymore. The last thing I’ll say about the narrative is change in market participants will also change the nature of Bitcoin. And what I mean by it it’s five years ago or even two, three years ago, majority of the people that were maybe investing in Bitcoin were the early adopters who came in for the ideology or people that were maybe very tech savvy and were intrigued by the technology. So it was a very small group, but it was also cohesive what we call HODLer, which is I’m gonna buy it HODL, I’m not here for the speculation or the trading. I believe in it. I’m going to buy and hold for however long I want. But as the market participants and the diversity of market participants has changed, whereas you have hedge funds, you have endowment funds, you have active investors and traders coming into it. They’re bringing a different mindset and ethos, and what we saw during the crisis was when you need liquidity, you are going to sell anything you can sell, whether it’s equities, oil, gold, Bitcoin, you name it, cause you know, cash really is king. So I think some of that change in market participants also is having an influence on the evolution of Bitcoin’s narrative.
Bitcoin Apathy is No Longer Kosher
Craig: Is TD seeing more advisors investing their clients’ portfolios into Bitcoin?
Sunayna: I would definitely say that the RIAs are at an interesting inflection point. Craig, as you know, we host our annual RIA event every year at the end of January, which again seems like an eternity ago, but at our last LINC conference in partnership with Ric Edelman who you know and is friend of the advisor community, we hosted a full day education event for the RIAs. And really the goal was to help to help build awareness and acumen so they can get comfortable with it, have an understanding where they can also serve the needs of their clients. At one point I asked a room of like hundreds, thousands of advisors and said, how many of you believe Bitcoin is a fad? And none of the hands went up and as you know, this is not a shy group, and I then said, okay, how many of you would have raised your hands a year ago or two years ago? And pretty much all hands went up. And then talking to the advisors, we really hearing that there’s this inflection point where their clients are trying to ask them about it and they really need to understand and listen, we’re not in the advice giving business, but we do believe that we want to give them credible information and education. And as I say to everybody, it is totally cool to be skeptical. In fact, I’d encourage skepticism.
Sunayna: When I first heard about Bitcoin in 2012, it took me a good nine months to get my head around it because you know, you almost have to suspend belief of certain things to fully get this. But what I tell people is skepticism is totally Kosher, but what is no longer Kosher is apathy. You cannot be ignorant about it. You have to lean in, you have to learn because ultimately knowledge is power. And hence education is an area where we’ve invested a lot of time and effort to make sure whether you’re an active trader, a retail investor or an RIA that you have access to credible education, good understanding, and then you can make the best decision you want for yourself and your clients.
Craig: Can I quote you on that? Bitcoin apathy is no longer Kosher.
Sunayna: Oh yeah. I tell people all the time skepticism is okay. Apathy, not Kosher.
Craig: What’s your prediction for wealth management with Bitcoin and other crypto? So Bitcoin isn’t the only cryptocurrency, right? It’s clearly the largest, but we have lots of other ones like Ethereum, Ripple, Litecoin, you know, BitcoinCash, Stellar. Do you see baskets of crypto becoming more the way advisors will invest or do you think Bitcoin will still become the primary way?
Sunayna: Yeah, I agree we’ve kind of been focused on Bitcoin, but the universe of digital assets is pretty big and continues to grow. What I would say is there is a bit of that 80/20 rule where if you’re just getting into digital assets or you already are in digital assets, a lot of people tend to start with Bitcoin or stay with Bitcoin before they get into some of the other coins. So that’s definitely an important focus area for us. I think in terms of wealth management this is something I actually share a lot with my colleagues and friends that are in the native crypto community, creating a bridge between traditional wealth management and the proliferating space of digital assets is there’s actually a lot of resonance in what’s happening with digital assets to what’s happened in wealth management over the last 40 years.
Sunayna: And the story I share with them is about May Day, which very well. Until May Day came along on May 1st, 1975, access to capital markets was reserved for a very small group that either had the right connections or a lot of money in capital to gain access. May 1st, 1975 came around, and the rule change with May Day completely changed the landscape and disrupted Wall Street. It gave rise to our entire industry, the RIA industry, the discount brokerage industry. So we’re definitely seeing that same resonance and that same ethos democratizing access, breaking down barriers and leveling the playing field of bringing Wall Street to Main Street, apply to digital assets. And I recently was on a biography binge and read to Joe Ricketts, his biography, “The Harder You Work, the Luckier You Get“, and Charles Schwab’s biography “Invested“, and it was amazing. If I had removed the word “discount brokerage” from their stories, a lot of what they went through in building this industry is actually very similar to what we’re going through as we’re building up the digital assets industry.
Sunayna: So I think we can learn a lot from what traditional wealth management has been able to build and accomplish in the last 40 years in terms of empowering everyday Americans to take charge of their financial future. And I think digital assets is the next step in that legacy, and frankly, a key reason as to why TD Ameritrade is leading into it. You know, it’s driven by client demand and it’s also driven by our DNA and continuing this legacy of leveling the playing field for everyday investors in the RIA community.
Innovation at TDA
Craig: Can we talk a bit about the ways that TD Ameritrade is kickstarting innovation in digital assets? What are some things that you guys are doing to bring more digital assets in the wealth management space?
Sunayna: Our practice, as we look at the spectrum, there’s three key prompts to our approach. The first is products and services. So what products and services can we build that can enable traditional investors and the RIA community to engage with this asset class, what on-ramp can we turn on? And for us we’re guided by this notion of choice is good, right? Just like traditional asset class size, if you wanted to engage with the markets, by buying an ETF or equity trading or getting into derivatives trading, we’ve created all those on-ramps that are simple, fast and easy, and at your fingertips. We want to create the analogous of that for digital assets trading, that if you have a finite amount of investible assets investing in the traditional markets or investing in the crypto market, the on-ramp and the usability and the experience should be very similar and easy.
Sunayna: Now there’s a lot of work to be done on the digital assets state, but that’s the products and services side. The second prong is really partnerships and investments. Very similar to my last assignment, really looking to work with key startups and tech companies and either invest in them or co-create with them. You know, we know what we can bring to the table given our 40 year history in capital markets, but who can we partner with for example, in the DFI space. So it’s one plus one equals six and be a force multiplier for the ecosystem. And then the third way to bring this access to consumers is really around education and advocacy, which I touched on. While there’s again, going back to my personal example in 2012 when I got into it, there wasn’t a lot of material online that I could read and learn about Bitcoin.
Sunayna: There was a white paper, which even I had to read like 10 times to fully comprehend. And today there’s an explosion of content, but we need to make sure that content resonates with our clients and would be RIAs. So really delivering education about digital assets in kitchen English, and stripping out all the crazy technical lexicon and making it real for them, and also delivering it in a diversity of modalities so they can consume content on the go that’s an area we’ve been focused on. Similarly with advocacy working hand in hand with the regulatory community, because we want to do this and we want to do this right with utmost pragmatism is prudent. So when consumers do engage with this asset class, their safety and soundness is number one priority.
Craig: And that is to be expected considering you work for a custodian.
Sunayna: Indeed. Going to law school is finally paying off.
Craig: So the safety and soundness is very high on your list.
Sunayna: Absolutely. Listen, I don’t want to build and launch something that is going to get shut down because we weren’t purposeful and methodical in building that product, or it works for a thousand people, but you can’t scale it up to 10 million consumers. So just as we did in my last assignment with a tighter team, we very much engage with and bring all of my BFFs from legal compliance, risk, regulatory affairs, from day one. And they’re part and parcel of helping us build these products, form these partnerships. Again, I’m grateful to be at a company where we’re one of the biggest champions for digital assets, and one of my favorite partners to engage with is our Chief Risk Officer. He’s just as engaged and bullish about digital assets and loves to nerd out about it as much as I do, and I think that’s really important because we recognize it’s a nascent technology, it’s a nascent asset class, and we are in a unique position to really bring it to the masses, but we need to do it with utmost prudence and with pragmatism.
The Lightning Round
Craig: Okay. So before we wrap things up, I want to do a little lightning round. So I’m gonna ask you a couple of quick questions to get your opinion. So, end of this year, what’s your price of Bitcoin?
Sunayna: Oh, no, I don’t get into prices. No, no, no, I’m going to skip that because I’m not gonna make anybody happy.
Craig: When does a crypto, not necessarily Bitcoin, but when does crypto become a standard asset class that most advisors are putting the portfolios?
Sunayna: I think I would project the next couple of years.
Craig: So very soon.
Sunayna: We’re starting to see that, right, with some of the managed products and the engagements, and I think Ric talks about it much more eloquently that even a 1% allocation into crypto or Bitcoin and how that’s fairs in a longterm for client’s portfolio, it’s very powerful, and again hard to ignore. Ignorance is not an option, right?
Craig: You should not ignore Bitcoin or blockchain. And yeah, he does suggest a 1% allocation, and that would be a lot if advisors control $7 trillion, if they all put 1% in Bitcoin, that would be a huge bump for that commodity,
Sunayna: Hey, listen, slow and steady does win the race. Some of the advisors will often come up to me and say, Oh my god, I feel like I’m late to this. I’m like, no, you’re not. This is all 10 years old. This is all in formation phase. Yes, it seems like some people who are into it kind of nerd out and go deep into the rabbit hole, but here’s the thing everybody’s learning. And that’s one of the things I tell everybody, including your audiences, if somebody walks up to you and says, Hi, I’m an expert in Bitcoin or blockchain or crypto. You run far, and you run fast because the people who are truly experts and know the space are humble enough to say we are all learning and we’re all building together.
Craig: And on that note, I’m gonna wrap things up. Thank you so much Sunayna for being with us on the program and sharing some of your knowledge and experience in the digital world, and we’re all moving forward together.
Sunayna: Delighted to be here. Thank you, Craig.
