10 minute read
Key Takeaways:
- Nearly half of all crypto discussions are client-driven, but most advisors still feel unprepared to lead them.
- This blog offers a clear, jargon-free, and educational crypto cheat sheet so financial advisors can confidently engage with clients.
- Covers Bitcoin, Ethereum, DeFi, stablecoins, NFTs, risks, taxes, and more - all in plain English.
Clients Want to Talk About Crypto. Most Advisors Don’t. And That’s an Opportunity
Crypto isn’t just a niche buzzword anymore - it’s part of the financial conversation your clients are likely already having (whether you’re in the room or not).
In fact, as shown in the JumpApp study below (covering 3,400+ advisor-client meetings), crypto stands out as the only asset class where clients initiated more conversations than advisors.
- 49% of crypto conversations were initiated by clients.
- Compare that to bonds — where just 8% came from clients, and 92% were advisor-led.
Figure 1: JumpApp, June 2025
So, why aren’t more advisors leading on this?
Because most don’t feel confident discussing crypto.
- Just 12% of advisors say they’re “very comfortable” talking about cryptoassets1.
- Meanwhile, 82% of wealthy investors want crypto guidance from their advisors — yet 29% doubt their advisor’s expertise2.
That disconnect is a potentially missed opportunity.
Now, this doesn’t mean crypto belongs in every portfolio — but if your clients are thinking about it and you're silent, someone else will fill that gap.
Still, even if you’re open to the conversation, it’s a dense topic. BTC, ETH, DeFi, NFTs, stablecoins — it can feel like an alphabet soup.
That’s why we built this crypto cheat sheet for advisors.
It’s designed to make the complex simple — with clean definitions, relatable analogies, and no-nonsense breakdowns to help you feel prepared and credible.
Crypto Cheat Sheet for Financial Advisors
Cryptocurrency is no longer just for tech-savvy traders. Many clients — from Millennials to Baby Boomers — are curious about Bitcoin, blockchain, and digital assets, but don’t know where to begin. Use this cheat sheet to break it all down in a clear, approachable way.
What Is Bitcoin?
I like to think of it as “digital gold”.
Bitcoin (aka BTC - the world’s first cryptocurrency) is a decentralized, digital currency — no banks, no governments. It’s scarce (only 21 million will ever exist), which gives it value, like gold. But unlike gold, it’s digital, portable, and divisible.
Client takeaway: Think of it as a store of value like gold — a potential hedge against inflation, but with much higher volatility.
What Is Ethereum?
Ethereum (aka Ether) is the second biggest cryptocurrency by market cap (only behind BTC).
And what makes it interesting is that it’s the “programmable” blockchain that hosts other cryptocurrencies.
- Think of it this way, if Bitcoin is digital gold, then Ethereum is a digital infrastructure. It powers smart contracts, apps (called dApps), NFTs, and more.
Client takeaway: It’s not just a currency — it’s a platform for building next-gen financial tools and services.
What Is Blockchain?
Think of it like a public digital ledger — like a spreadsheet that lives everywhere.
Every crypto transaction is recorded in a “block.” These blocks are linked together in a secure chain - hence, “blockchain.” It’s tamper-resistant and open for anyone to view, meaning it’s extremely unlikely to change or erase blockchain history.
Client takeaway: Blockchain is a decentralized public ledger that records transactions. without needing a middleman like a bank or clearinghouse. We can see every single activity that occurs. show less, giving people open transparency.
What Is DeFi (Decentralized Finance)?
DeFi means financial services without the bank.
It lets people lend, borrow, earn interest, and trade - all without traditional financial institutions. These services run on smart contracts (aka self-executing code) instead of bankers and loan officers. (But that also means no centralized customer support or regulation, which can introduce some big risks.
Analogy: DeFi is like a farmers market for finance — no big grocery stores, just direct deals between people.
Client takeaway: It's a peer-to-peer system: more freedom, fewer middlemen, but you need to know what you're buying. Exciting, but not insured.
What Is a Smart Contract?
Smart contracts are blockchain-based code that automatically carry out actions when certain conditions are met. Think of it like a middle man. It’s just a contract that executes all by itself.
Analogy: Like a vending machine — you insert money, and it delivers the item, no questions asked.
Client takeaway: Transparent, automatic, and eliminates the need for middlemen.
What Is a Stablecoin?
Stablecoins are cryptocurrencies pegged to the U.S. dollar (or another currency), often 1-to-1. So think of it as a digital dollar. They aim to reduce price volatility, making them a common way to move money in and out of the crypto world.
But stablecoins aren’t risk-free. Some have lost their peg (aka “de-pegging”) - especially when there’s poor transparency around the reserves backing them. Put simply, if the issuer doesn’t hold enough cash or liquid assets, users may not be able to redeem them at full value.
But eve with this in mind, it’s not just a niche groups using this. Banks and major financial institutions are increasingly using stablecoins to enable faster, cheaper, and more efficient cross-border payments, bypassing traditional settlement systems that can be slow and costly3.
Analogy: Stablecoins are like digital casino chips - fast and easy to use within the system, but only as good as the house that backs them.
Takeaway: Stablecoins are useful for trading and transfers, but not all are created equal. Always check what backs them — transparency matters.
What Is a Meme Coin?
Meme coins are cryptocurrencies driven largely by internet hype, social media trends, and community enthusiasm — not by strong fundamentals or real-world use cases.
Examples include Dogecoin and Shiba Inu, which gained viral popularity but were originally created more as jokes than serious financial tools.
Analogy: Like investing in a joke stock because it went viral on Reddit. There’s no real fundamentals behind it, just the hype pushing prices higher.
Client takeaway: Fun for some, but highly, highly speculative and risky.
What’s the Difference Between a Coin and a Token?
Remember, all coins are tokens, but not all tokens are coins. What I mean is:
- A coin (like Bitcoin, Ether) runs on its own blockchain.
- Whereas a token is built on top of another blockchain (usually Ethereum).
- In short, coins are the original currency of a blockchain, like Bitcoin on the Bitcoin network or Ether on Ethereum. Tokens are built using someone else’s blockchain, like apps built on top of an operating system — they need the underlying platform to work.
Client takeaway: Tokens can represent ownership, access, or features within a platform — but they rely on someone else’s infrastructure.
What Are NFTs?
NFTs, or non-fungible tokens, are digital certificates of ownership recorded on a blockchain. They prove that you own something unique, like a piece of digital art, music, video, contract, or even a concert ticket. Unlike cryptocurrencies (which are fungible and interchangeable), NFTs are one-of-a-kind or part of a limited set.
- For example, imagine if the Mona Lisa was made online. The original piece would then have the NFT proving it isn’t a copy.
Client takeaway: Early-stage, but may change how we prove, trade, and track ownership online.
What Is Web3?
Web3 is the next evolution of the internet - built on blockchain technology.
While Web1 was static content and Web2 enabled interaction (think social media), Web3 introduces ownership – aka users can control their data, digital assets, and identity using decentralized apps (dApps), cryptocurrencies, and smart contracts.
Analogy: Web3 is like owning your own house on the internet — instead of just renting space on someone else’s platform.
Client Takeaway: It’s the internet, reimagined around user control and decentralization. Still early-stage, but already reshaping how people interact, transact, and build online.
What’s the Role of Regulation?
Crypto is overseen by a mix of agencies — the IRS (for taxation), SEC (for securities), and CFTC (for commodities) — but clear, consistent rules are still emerging.
Globally, some countries are moving faster with frameworks, while in the U.S., regulatory adoption is picking up, especially around stablecoins, crypto ETFs, and digital asset custody.
Client Takeaway: It’s no longer the Wild West, but it’s not fully Main Street either. Regulation is catching up, and while that could bring clarity and investor protection, it may also reshape the space.
How Do You Store Crypto?
Crypto lives in digital wallets, not physical ones — but how you store it matters a lot.
- Hot Wallets: These are apps or exchanges connected to the internet (like Coinbase). They’re convenient for trading but more vulnerable to hacks or phishing.
- Cold Wallets: These are offline devices — usually USB-style drives — that keep your crypto stored safely offline. They’re much more secure from cyberattacks, but still carry real risks. For instance, if you lose the device, misplace your private key, or forget the recovery phrase, you could lose access permanently. There’s no password reset button in crypto.
Client takeaway: Think of it like choosing between online banking and a locked safe. Cold wallets offer security - but require serious responsibility.
What About Taxes?
Crypto is taxable — just like property or any other asset.
- Capital gains/losses apply when selling, trading, or converting crypto.
- Even using crypto for a cup of coffee can trigger a taxable event.
Client takeaway: Track everything. Every move may carry a tax consequence.
What Are the Risks?
There are quite a few – some of the big ones being:
- Volatility: Prices can swing wildly.
- Fraud & Scams: Phishing, rug pulls, and Ponzi-like projects exist.
- Regulatory Uncertainty: Laws are changing and vary by country.
- Lack of Protections: No FDIC or SIPC for most crypto platforms.
Client takeaway: Crypto carries real risk — education and caution are essential.
Why Are Some Investors Still Interested?
- Portfolio Diversification: Cryptocurrencies may offer low correlation to traditional assets like stocks and bonds
- Innovation Exposure: They provide access to emerging technologies and financial trends such as DeFi, blockchain, and Web3.
- Inflation Hedge (theory): Some investors view Bitcoin as a potential hedge against fiat currency debasement and long-term inflation
Client takeaway: While cryptocurrency investing carries substantial risk and isn’t suitable for everyone, it can offer a way to gain exposure to the evolving digital financial ecosystem.
The Bottom Line for Advisors
Understanding crypto isn’t about becoming a digital asset expert overnight. No, it’s about meeting your clients where they are - with clarity, confidence, and curiosity.
Use this cheat sheet as a launchpad to spark thoughtful, educational conversations that can build trust, demonstrate your expertise, and keep your clients engaged.
- Quick reminder: Before diving into crypto discussions, be sure to check with your firm’s compliance team. Each firm has its own policies on which crypto-related products or conversations are approved — and staying aligned keeps things smooth and compliant.
- Want more content like this to help guide client discussions? Read our latest guide on how to talk to clients about the weakening dollar.
- Need support or resources? Reach out to the Dunham Business Development Team — we're here to help.
FAQ: Crypto Questions Clients Ask Advisors
What is cryptocurrency in simple terms?
Cryptocurrency is a digital form of money that runs on blockchain technology. It can be sent, received, or traded without banks, but prices can be highly volatile.
Is crypto safe for retirement portfolios?
Crypto carries significant risks, including volatility, fraud, and uncertain regulation. For most clients, it may only make sense as a very small, speculative allocation.
How are Bitcoin and Ethereum different?
Bitcoin is mainly a digital store of value, while Ethereum is a programmable blockchain used to run apps, smart contracts, and other digital assets.
How do you store crypto safely?
Clients can use hot wallets (apps and exchanges, convenient but hackable) or cold wallets (offline storage, more secure but less convenient). Both require careful responsibility.
What are the tax rules for crypto?
In the U.S., crypto is taxed like property. Selling, trading, or even using it to buy something can trigger capital gains or losses.
Sources:
- CFA Institute | PowerPoint Presentation
- 82% of Wealthy Investors Want Crypto Advice But Question Advisor Expertise | CNSRF Stock News
- Big banks are working on payment stablecoins | PaymentsSource | American Banker
Disclosures:
This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax or investment advice or an investment recommendation, or as a substitute for legal or tax counsel. Any investment products or services named herein are for illustrative purposes only, and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy or investment product or service. Always consult a qualified professional or your own independent financial professional for personalized advice or investment recommendations tailored to your specific goals, individual situation, and risk tolerance.
Digital assets, including cryptocurrencies, are subject to evolving federal, state, and international regulations. Advisors and clients are encouraged to consult with legal or tax professionals regarding any potential implications related to cryptocurrency holdings or transactions.
Cryptocurrencies are highly speculative and involve significant risk, including the potential for loss of principal. They are not insured by the FDIC or SIPC, and their regulatory status may vary or change over time. Clients should be aware that cryptocurrency markets can be volatile, illiquid, and susceptible to fraud or cybersecurity threats.
Mentions of specific cryptocurrencies, platforms, wallets, exchanges, or service providers are for illustrative purposes only and do not constitute a recommendation.
Financial professionals must follow their firm’s compliance policies when discussing crypto-related topics or products.
Dunham & Associates Investment Counsel, Inc. is a Registered Investment Adviser and Broker/Dealer. Member FINRA / SIPC. Advisory services and securities offered through Dunham & Associates Investment Counsel, Inc.. Trust services offered through Dunham Trust Company, an affiliated Nevada Trust Company. Dunham Private Trust is the Wyoming division of Dunham Trust Company.