Nasdaq Report: 72% of Financial Advisors Will Invest in Cryptocurrency If Spot Bitcoin ETF Approved

A new survey by the Nasdaq Stock Exchange found that 72% of financial advisors would be more likely to invest client assets in cryptocurrencies if a Bitcoin spot ETF was approved in the United States.

Nasdaq surveyed 500 U.S. financial advisors who are investing or considering investing in cryptocurrencies.

The report shows that among advisors who have already invested in cryptocurrencies, 86% expect to increase their holdings in the next 12 months, and zero respondents plan to reduce their holdings. In the same group, 50% of financial advisors have already bought Bitcoin futures ETFs, and 28% plan to start allocating in the next 12 months.

On average, advisors who currently or are considering investing in cryptocurrencies say their ideal cryptocurrency allocation is 6% of their clients’ total portfolios. Notably, about 69% of these advisors would consider using index funds for broad investing, followed by sector-specific index funds (57%), actively managed funds (52%), individual digital assets (40%), and high-yield funds (31%).

Spot ETF Approval

Despite numerous attempts by prominent institutions and financial management firms to launch spot or physical crypto ETFs in the United States, the U.S. Securities and Exchange Commission (SEC) has so far rejected all such applications, citing the immaturity of the crypto market and the lack of consumer protection.

Financial advisors also have no confidence that a spot Bitcoin ETF will be approved in 2022. Only about 38% think it is possible, 31% think it is unlikely, 24% are neutral, and 7% are unsure.

“Over the past decade, financial advisors have focused on moving assets into index funds,” said Jake Rapaport, head of Nasdaq Digital Asset Index Research. “As they incorporate digital assets into their investment strategies, they have expressed strong interest in similar tools that can provide clients with exposure to a broad asset class, with the vast majority of advisors we surveyed either planning to begin allocating to cryptocurrencies or increasing their existing crypto allocations. As demand continues to surge, advisors will look for an institutional solution to address current crypto demand.”

Widespread adoption by RIAs

The survey also found that crypto adoption is highest among registered investment advisors (RIAs), with 34% of RIAs using crypto, compared to 19% of independent broker-dealers (IBDs) and 17% of wireline advisors. About half of RIAs (49%) reported that compliance rules and restrictions are a barrier to crypto investing, compared to 78% of all other investment avenues.

About 10% of advisors report being very knowledgeable about crypto, and 9% are very confident in their ability to advise clients on crypto. Nearly all advisors surveyed (98%) expressed an interest in learning more about crypto and digital assets.

Among the respondents, about 7% said that ESG (environmental, social responsibility and corporate governance) is a very important consideration when determining clients' digital asset strategies.

Rapaport added: “Crypto adoption through financial advisors shows no signs of stopping, even as advisors grapple with compliance issues and seek guidance from other industry participants, including asset managers and index providers. We expect the integration of ESG and crypto considerations to become a trend as investors continue to allocate assets to both.”