68% of investment executives think clients shouldn’t own cryptocurrency
A Bitcoin ATM is seen inside a gas station in Los Angeles on June 24, 2021.
CHRIS DELMAS | AFP | Getty Images
According to a survey by Natixis Investment Managers, roughly two in three “fund pickers” don’t think retail investors should have cryptocurrencies in their portfolios, largely for transparency and regulatory reasons.
Fund screeners at brokerage firms, financial advisory firms, private banks and other institutions analyze and choose the investments their firms offer to clients.
Sixty-eight percent don’t think individuals should have access to crypto, according to the survey, which polled 141 U.S. investment executives at firms that manage $2.7 trillion in client assets.
However, this sentiment is colliding with strong demand for digital currencies like bitcoin and ethereum, especially among younger investors – 40% of survey respondents say customers are increasingly demanding crypto access.
More than 10% of investors own crypto, ranking digital coins behind real estate, stocks, mutual funds and bonds, according to a CNBC survey published in August. Two-thirds of them have bought in the last year, mainly because of the ease with which it has become possible to trade the assets.
Meanwhile, crypto exchanges saw heavy commercialization during the Super Bowl on Sunday. Proponents like Tesla and SpaceX CEO Elon Musk have also helped fuel investor enthusiasm.
And financial firms continue to offer investors ways to jump into the digital frenzy. The first exchange-traded funds linked to the price of bitcoin futures debuted in October.
But the reluctance of investment professionals is largely due to the challenges they see with crypto transparency and an apparent lack of regulation, according to Dave Goodsell, executive director of the Natixis Center for Investor Insight.
About 87% agreed that crypto assets need to be more transparent and 84% believe they will need some type of regulatory oversight, according to the company’s survey released on Tuesday.
“I think it’s hard to recommend things like that if they play a fiduciary role,” Goodsell said, referring to the legal obligation some companies owe their customers. “I think that’s where the hesitation comes from.”
Around 70% also admitted that their business needs more education on digital assets and cryptocurrencies before investing in them.
However, hesitancy to crypto extends beyond fund pickers.
Sen. Elizabeth Warren, D-Mass., told a Senate Banking Committee hearing in July that crypto “puts the [U.S. financial] system at the whims of a shadowy, faceless group of super coders and miners.
However, at the same hearing, Sen. Cynthia Lummis, R-Wyo., touted the transparency and openness of open source finance as a way to promote financial inclusion.
Financial advisors generally do not recommend that clients allocate more than a small portion of their investment portfolio to crypto, given its volatility. Bitcoin prices have fallen to around $43,000 per coin from their recent high of $67,000 in November.