Digital Assets

Access Innovative Assets With Disciplined Oversight

Digital assets are investments that exist primarily in digital form and are recorded using blockchain technology. They include things like cryptocurrencies, tokenized versions of real-world assets, and other online-based financial instruments. As this area continues to grow, many investors want a way to participate that still includes careful research, clear structure, and thoughtful risk management. At Mercantile Advisors, we approach digital assets with the same rigor we apply to every strategy.

Cryptocurrency: Cryptocurrency refers to decentralized digital currencies secured by cryptography and recorded on blockchain networks. Assets such as Bitcoin and Ethereum operate independently of central banks and can serve various purposes, from transactional utility to store-of-value considerations. Participation requires careful evaluation of volatility, liquidity, and regulatory factors.
Tokenization: Tokenization involves representing real-world assets, such as real estate, private investments, or other financial interests, in digital form on a blockchain. This structure can enhance transparency, transferability, and efficiency in certain markets. However, tokenized structures require due diligence regarding custody, legal framework, and operational safeguards.
Separately Managed Accounts: Customized design and implementation of Digital Assets gives pure exposure to this asset class. Such accounts, when reviewed on a portfolio basis, will introduce non-correlation to traditional assets by not being contained in packaged instruments that trade during market hours only. Digital Assets trade continuously and offer other benefits not available in a packaged format.
Digital Collectibles & NFTs: Non-fungible tokens, or NFTs, represent unique digital assets recorded on a blockchain. These may include digital art, intellectual property rights, or other unique digital representations of value. While interest in NFTs has grown significantly, valuation and liquidity considerations require disciplined assessment.

Why Digital Assets?

Digital assets can offer strategic opportunities when approached strategically and within appropriate allocation limits.

Portfolio Diversification

Certain digital assets may exhibit return patterns that differ from traditional asset classes, potentially enhancing diversification within a broader strategy.

Innovation Exposure

Blockchain technology continues to influence financial infrastructure, payments, and asset ownership, offering exposure to new technological trends.

Structural Efficiency

Tokenized and digitally native assets can introduce efficiencies in transfer, settlement, and record-keeping when properly structured and regulated.

How Mercantile Advisors Can Help

We offer access to digital assets on a customized basis by designing individual accounts that have allocations to the various coins, based on client risk tolerances and reward targets. These accounts offer a direct correlation to this asset class without the behavioral characteristics found in structured products such as ETFs and Trusts.

As a Registered Investment Advisor with institutional access to two US-based crypto exchanges, we understand the evolving regulatory framework of this emerging asset class and apply disciplined oversight accordingly.

Frequently Asked Questions About Digital Assets

What are digital assets?

Digital assets are investments that exist primarily in electronic form and are typically recorded on blockchain networks. They may include cryptocurrencies, tokenized assets, and other blockchain-based financial instruments.

What types of digital assets are available to investors?

Digital assets may include cryptocurrencies such as Bitcoin and Ethereum, tokenized real-world assets, non-fungible tokens (NFTs), and other blockchain-based instruments. Each category has distinct characteristics, risks, and use cases.

How does Mercantile Advisors approach digital assets?

Mercantile Advisors approaches digital assets with a disciplined, research-driven process. The firm evaluates volatility, liquidity, regulatory considerations, and structural risks to determine whether and how digital assets may fit within a broader strategy.

How can digital assets affect portfolio diversification?

Some digital assets may exhibit return patterns that differ from traditional investments, which can contribute to diversification when used appropriately within a broader portfolio strategy.

What risks should be considered with digital assets?

Digital assets involve risks such as price volatility, liquidity constraints, regulatory uncertainty, custody considerations, and evolving market structures. These factors require careful review before participation.

Who may benefit from digital asset strategies?

Digital asset strategies may be suitable for investors who are interested in emerging financial technologies and are comfortable evaluating the unique risks and characteristics of this asset class within a broader investment framework.