Key Takeaways:
- According to a new Nasdaq study of 500 financial advisers who are presently allocating to crypto or are considering doing so, 72 percent of advisors would be more willing to invest client assets in crypto if a spot ETF product was available in the US.
- 86 percent of advisers who have already invested in crypto intend to grow their allocations in the next 12 months, while 0 percent expect to reduce. 50% of the same group is already utilising Bitcoin futures ETFs, with another 28% planning to do so in the next 12 months.
- According to the poll, registered investment advisors (RIAs) are the most likely to employ cryptocurrency, with 34% doing so compared to 19% for independent broker-dealers (IBDs) and 17% for wirehouse advisers.
As per outcomes of a new Nasdaq poll of 500 advisors who are now allocating or contemplating allocating to crypto, more than 70% of advisors would be more willing to invest their clients’ assets in cryptocurrencies if a spot crypto ETF was provided in the United States.
In a study of 500 advisers who stated they are either investing or considering investing their clients’ assets in crypto, 86 percent said they want to expand their holdings over the next year, while none said they plan to decrease their crypto holdings.
The research does not respond to the big segment of advisers who remain wary of digital assets because it excludes those who aren’t interested in crypto.
Only four out of 10 advisors explored investing in specific cryptocurrencies, according to the survey. Sixty-nine percent indicated they would invest in a crypto index fund to get a broader view of the market.
Those who are onside with crypto appear to have taken it slowly, with respondents settling on a crypto allocation cap of 6% of a typical client’s portfolio as an ideal level.
In a tweet Monday morning, Bloomberg’s Eric Balchunas calculated that advisors in the United States jointly oversee $26 trillion in client assets.https://twitter.com/EricBalchunas/status/1513488010247307267?s=20&t=ktwwpgpNAH-w0a6pQBc5Tg
Only a minority of advisors embrace crypto, according to Michael Krause, co-founder and CIO of Counterpoint Mutual Funds, and this group likely narrows younger – in other words, these advisors own fewer assets.
Krause told Balchunas that it “wouldn’t surprise me if this is only 5% of your 26T number at most.” Advisors that have already invested in crypto have said that they are raising their allocations as they get closer to the 6% mark, or expect to do so once they begin investing in such assets. This shift suggests that at least some advisors are beginning to see digital assets as less of an outlier than they once did, and are eager to see some of the similar product structures related to traditional assets like equities and commodities—such as exchange-traded funds—develop around crypto.
In a statement, Jake Rapaport, head of Nasdaq’s digital asset index research, stated, “The vast majority of advisors we polled either plan to begin allocating to crypto or expand their existing allocation to crypto.”
According to Nasdaq, around 69 percent of those advisors would consider utilising an index fund for broad exposure, followed by sector-specific index funds (57 percent), actively managed funds (52 percent), individual digital assets (40 percent), and high-yield funds (31%).
Despite considerable demand in a conservative approach to crypto and a spot crypto ETF, the advisors polled were not optimistic that such a product would be approved by 2022. Only 38% thought it was likely, while 31% thought it was unlikely, 24% thought it was neither likely nor unlikely, and 7% said they weren’t sure.
Half of advisors surveyed claim they are using a Bitcoin futures ETF for at least some of their crypto allocations
There was renewed optimism about the possibility of a Bitcoin ETF being approved. The Teucrium Bitcoin Futures Fund was approved by the Securities and Exchange Commission. This Bitcoin futures ETF, unlike the others, was registered under the Securities Act of 1933.
When the SEC turned down three Bitcoin futures ETFs, they stated the ‘1933 act’ didn’t provide enough consumer protection. However, it looks that a major roadblock has been eliminated now that a futures Bitcoin ETF has been certified under the 1933 legislation.
Crypto markets have been flourishing more than ever, every realm that crypto touches it grows and lawmakers and regulators have been watching. Sen. Elizabeth Warren has been one of the most vocal crypto doubters in Congress, warning about the possibility for Russian oligarchs and other illegal actors to use cryptocurrency to move or hide money invisibly.
Treasury Secretary Janet Yellen gave a big address on crypto policy last week, speculating on a federally backed digital currency but stating that it would be years away, and suggesting that the digital asset industry requires stricter rules. Yellen didn’t make any specific recommendations, but the idea of a well-regulated crypto market could find widespread support in the wealth management industry.
Advisors stated they are most likely to invest in Bitcoin (78 percent) and ether (61 percent) during the next year when asked about individual cryptocurrencies in the Nasdaq study. Only 13% of advisers think they’re likely to invest their clients’ funds into Litecoin or Bitcoin Cash, followed by Solana at 11% and a slew of other cryptos with single-digit interest among advisors.
“The sector as a whole also needs to address a number of pain points that are preventing widespread adoption and regulatory backing, including as capital efficiency, asset safety, and asset security,” Rapaport said. “As the digital asset field matures and evolves, institutional-grade and trustworthy infrastructure will become increasingly important for widespread adoption.”
RIAs Are the Most Common Crypto Adopters:
compared to 19% of independent broker-dealers (IBDs) and 17% of wirehouse advisors.
On average, advisers aim to commit 6% of a client’s total portfolio to cryptocurrency.
For wide exposure, over 70% would consider an index fund, followed by sector-specific index funds (57%), actively managed funds (52%), individual digital assets (40%), and high-yield funds (31 percent ).
According to the poll, RIAs are the most common crypto adopters, with 34 percent using crypto compared to 19 percent for autonomous broker-dealers and 17 percent for wirehouse advisors.
According to Nasdaq, nearly half of RIAs (49%) indicated compliance requirements and limits were a hurdle to crypto investing, compared to 78 percent of advisors in all other channels.
Approximately 10% of advisers stated they were extremely informed about cryptocurrency, and 9% said they were very confident and competent to advise customers on cryptocurrency.
According to Nasdaq, almost all advisers surveyed (98 percent) indicated a desire in understanding further about crypto and digital assets.
“Crypto inflows through advisor channels show no indications of slowing,” according to Rapaport, “even as advisors battle with regulatory concerns and seek help from instructional materials from other industry participants, such as asset managers and index providers.” “As investors continue to direct funds into both, we expect ESG and crypto considerations to converge.”
Nasdaq and Hashdex, a globally leading crypto-focused asset manager, officially launched the Nasdaq Advisor Academy: Digital Assets curriculum in March 2022. The Nasdaq Advisor Academy: Digital Assets curriculum will provide all financial advisers with informational and engaging resources on the digital asset ecosystem.
