Nasdaq Survey: Spot Crypto ETF Would Speed Adviser Allocation
Nearly three-quarters of advisers would be more likely to invest in the space if a spot ETF were offered in the US
Blockworks exclusive art by axel rangel
key takeaways
- While 86% of financial pros plan to boost their crypto allocations in the next year, none plan to decrease
- Advisers, on average, report wanting to allocate 6% of a client’s total portfolio to crypto
Nearly nine of 10 financial advisers investing in crypto expect to increase their allocations over the next year, according to a Nasdaq survey, though the approval of a spot crypto ETF would help speed further adoption.
The survey published Monday gathered input from 500 advisers who are currently or considering allocating to crypto. While 86% plan to boost their allocations to the space in the next 12 months, none plan to decrease over that span.
“This is significant because it shows that neither advisers nor their clients are feeling buyer’s remorse as a result of their decisions,” Jake Rapaport, Nasdaq’s head of digital asset index research, told Blockworks.
But 72% of advisers would be more likely to invest client assets in crypto if a spot ETF were offered in the United States, the survey found.
The Securities and Exchange Commission has not yet approved a product that invests directly in cryptocurrencies, such as bitcoin, and 31% of respondents said they find it unlikely that such a product will be approved this year.
Bloomberg Intelligence analysts have said they do not expect a spot bitcoin ETF to be approved until mid-2023.
In the meantime, fund groups ProShares, Valkyrie Investments and VanEck last year launched ETFs that primarily invest in bitcoin futures contracts. The SEC last week approved a bitcoin futures ETF from asset manager Teucrium filed under the Securities Act of 1933 — the regulation under which spot bitcoin ETFs are filed.
Half of the advisers already investing in crypto are allocating to bitcoin futures ETFs, and 28% plan to start using them in the next 12 months, Nasdaq discovered.
Who is allocating, and how?
About a third of registered investment advisers (RIAs) use crypto, compared to 19% of independent broker-dealers (IBDs) and 17% of wirehouse advisers.
Advisers, on average, report wanting to allocate 6% of a client’s total portfolio to crypto.
Roughly 70% would consider using an index fund for broad exposure, followed by sector-specific index funds (57%), actively managed funds (52%), individual digital assets (40%) and high-yield funds (31%).
Despite this, only 10% of advisers say they are very knowledgeable about crypto. Nasdaq partnered with asset manager Hashdex last month to launch a digital assets curriculum for financial professionals.
“There is so much room for educational growth on the subject,” Rapaport said, noting that asset managers, index providers and media publishers can all help narrow the gap. “What’s less surprising is that advisers know what they want, and they largely want access to passive investment products for their clients’ portfolios.”
Nasdaq launched its crypto index in February 2021. It allocated roughly 67% to bitcoin and nearly 30% to ether, as of March 1, as well as allocations of less than 1% to eight other cryptoassets.
“We continue to believe that the Nasdaq Crypto Index simplifies access to the entire asset class by adhering to principles that matter to advisers and investors,” Rapaport said. “We look forward to driving further innovation in crypto to support all types of investors.”
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