US financial advisors demand spot crypto ETFs

Apr 27th, 2022 | By | Category: Alternatives / Multi-Asset

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Financial advisors in the United States have demonstrated a clear appetite for spot crypto ETFs, according to a survey conducted by Nasdaq.

Jake Rapaport, Head of Digital Asset Index Research at Nasdaq

Jake Rapaport, Head of Digital Asset Index Research at Nasdaq.

Amongst a sample of 500 financial advisors who are currently or considering allocating to crypto assets, nearly three-quarters (72%) said they would be more likely to invest client assets in the segment if a spot ETF product were offered in the US.

The US Securities and Exchange Commission has, thus far, only permitted the introduction of crypto ETFs that gain their exposure by way of futures contracts. ProShares, Valkyrie Funds, and VanEck have all launched bitcoin-tracking products along this line.

Despite a clear preference for spot crypto ETFs, US financial advisors have not been put off utilizing futures-based bitcoin ETFs. Half (50%) of those surveyed have already allocated to these funds, while a further quarter (28%) are planning to start using them within the next 12 months.

The strong adoption of futures-based bitcoin ETFs amongst financial advisors may be driven by the belief that the introduction of a spot crypto ETF will be delayed – 38% of those surveyed thought it likely that such a product would be approved in 2022, while 31% found it unlikely, 24% found it neither likely nor unlikely, and 7% were not sure.

More generally, the survey found that demand for digital assets exposure is poised to increase with 86% of current investors planning to grow their allocations over the next year and none reporting plans to reduce their exposure. On average, financial advisors believe an ideal crypto allocation would be 6% of a client’s total portfolio.

As might be expected from a nascent asset class, a lack of education regarding crypto assets was reported amongst financial advisors. Only one in ten stated they were very knowledgeable about digital assets and, similarly, just 9% felt very confident in their ability to advise clients on crypto. Virtually all advisors (98%) expressed an interest in learning more about the segment.

Commenting on the survey results, Jake Rapaport, Head of Digital Asset Index Research at Nasdaq, said: “Over the last decade, financial advisors have been focused on shifting assets into index funds. As they incorporate digital assets into their investment strategies, they are expressing strong interest in a similar vehicle that can offer broad asset class exposure for their clients. The vast majority of advisors we surveyed either plan to begin allocating to crypto or increase their existing allocation to crypto. As demand continues to surge, advisors will be looking for an institutional solution to the crypto question that now dominates client conversations.”

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