68% of investment execs 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
Roughly two out of three “fund selectors” don’t think individual investors should own cryptocurrency in their portfolios, largely for reasons related to transparency and regulation, according to a Natixis Investment Managers survey.
Fund selectors at brokerage houses, financial advisory shops, private banks and other institutions analyze and choose the investments their firms offer customers.
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, that sentiment is butting up against high demand for digital currencies like bitcoin and ethereum, especially among younger investors — 40% of survey respondents say clients are increasingly asking for crypto access.
More than 10% of investors own crypto, ranking the digital coins behind real estate, stocks, mutual funds and bonds, according to a CNBC survey published in August. Two-thirds of them bought in over the last year, largely because of how easy it’s become to trade the assets.
Meanwhile, crypto exchanges marketed heavily 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 add ways for investors to buy into the digital frenzy. The first exchange-traded funds linked to the price of bitcoin futures debuted in October.
But investment professionals’ reluctance is largely due to challenges they see relative to crypto transparency and an apparent lack of regulation, according to Dave Goodsell, executive director of the Natixis Center for Investor Insight.
About 87% agreed crypto assets need to be more transparent, and 84% think they will need some type of regulatory oversight, according to the firm’s survey published Tuesday.
“I think that makes it challenging to recommend such things if they’re in a fiduciary role,” Goodsell said, referencing the legal duty some firms owe their clients. “I think that’s where the hesitancy comes from.”
About 70% also conceded their firm needs more education in digital assets and cryptocurrencies before investing in them.
Crypto hesitancy extends beyond fund selectors, though.
Sen. Elizabeth Warren, D-Mass., said during a Senate Banking Committee hearing in July that crypto “puts the [U.S. financial] system at the whims of some 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 don’t recommend clients allocate more than a small part of their investment portfolio to crypto, given its volatility. Bitcoin prices have fallen to around $43,000 per coin from their recent $67,000 high in November.