Financial advisers Direct the institutional push toward crypto adoption

In years past there were plenty of reasons for financial advisors to discount Bitcoin (BTC) and also other cryptocurrencies as a worthy investment, but most that is beginning to shift as more institutions become conducive to the digital asset class. Even a face-melting rally for Bitcoin between September 2020 and April 2021 amplified the necessity to push beyond the narrative that digital assets are just too volatile to add in client portfolios.  Among these themes has been the possibility for greater adoption among financial advisors. ‘Curiosity and demand’In an follow-up interview with Cointelegraph, Sonnenshein clarified that”fascination and demand from customers are driving financial adviser interest in crypto.” His decision stems from a preliminary poll commissioned by Grayscale demonstrating that”more than half of advisers are getting questions from their customers about cryptocurrencies.” Even though this might not induce immediate action, cryptocurrencies have become a concern for advisors, he clarified. “Ultimately, financial advisors are responding to customer demand,” he stated, adding:”Crypto normally and Bitcoin specifically has been well covered in the media, with major corporations and financial institutions making Bitcoin portion of the balance sheets, and also noteworthy entrepreneurs and investors expressing their investments at Bitcoin. If you’re a savvy investor, you’re going to need to learn more about this asset class, and if you’ve got a financial adviser, you’re going to inquire about it” Sonnenshein also noted that financial advisors are among the investors who invest in Grayscale’s family of capital, whose combined assets exceed $46 billion. “Bitcoin stays the most common digital money, although we see increasing interest in Ethereum and other digital assets too,” he said.Edouard Hindi, co-founder and chief investment officer of Tyr Capital, a United Kingdom-based cryptocurrency hedge fund manager, stated financial advisors have increased their allocation of digital assets, particularly Bitcoin, over the past six months. The change has also been observed at private banks, which have gone from seeking education on cryptocurrency to investment straight with Tyr Capital Arbitrage. He clarified that”the majority of the attention we are seeing stays concentrated on the directionless high tech attributes of capital such as Tyr Capital Arbitrage and directional exposure to Bitcoin.” Crypto exposure no longer’career-ending’Bitcoin’s newfound validity within the institutional ranks has eliminated a lot of this so-called”career risk” involved in investing in the digital asset market. As Hindi noted, 1 year ago fund professionals were thought to take a”career-ending danger” for investing in crypto.Now, it is deemed career-ending to not have some exposure to digital assets. The final domino to fall, Hindi believes, may be fiduciary standards:”Now that custody and regulatory barriers are gradually falling, what could be hindering a wider adoption of crypto by financial advisors is the perception that’Honorable criteria’ stay a challenge in openly advocating for the asset class to be contained in customers’ portfolios” “I believe there will be a big bottleneck for those advisers who work at the companies owned by large banks to supply crypto that isn’t in the form of a recorded ETF [or] safety,” Wang said. “These banks aren’t nimble enough to expand their wealth management supplies, particularly to non-listed crypto assets”  “It is a massive undertaking for all these firms/banks to be able to incorporate offerings in crypto in terms of adopting their existing risk management methods, infrastructure, compliance, legal, front office trading systems so the decision will not come without a lot of work and due diligence.” A changing landscapeWhile institutional adoption of digital assets remains obscure, many important investors and corporations have made a big splash by acquiring Bitcoin. Famous investors Paul Tudor Jones and Stanley Druckenmiller have BTC. On the corporate side, MicroStrategy and Tesla have obtained billions of dollars’ worth of Bitcoin to hedge against currency debasement. MassMutual, a Massachusetts-based insurance company, bought $100 million worth of BTC from December 2020. It’s estimated that companies currently hold almost 6.8percent of the circulating Bitcoin supply. BlackRock’s direction has gone as far as comparing Bitcoin to gold, with CIO Rick Rieder claiming that BTC will eat away at the precious metal’s market cap at the very long run. Jeffrey Wang believes institutional adoption will likely be”very prevalent” in the next 12 to 18 months, even going as far as saying that”the vast majority of firms will adopt blockchain in some manner.” So far, the hottest corporate earnings year on Wall Street hasn’t shown any new crypto investors, however, that may soon change because the bull market continues to grow. Tesla, meanwhile, announced that it offered a part of its Bitcoin for a substantial gain, a movement that CEO Elon Musk stated demonstrates the strength’s liquidity. Musk later affirmed that he hasn’t sold any of the Bitcoin.There’s also strong evidence that the venture capital world has been backing cryptocurrency jobs with ever-growing certainty. In addition to the heaps of VC-led investment rounds insured by Cointelegraph lately, Andreessen Horowitz is reportedly eyeing a new crypto-focused investment fund worth around $1 billion. That might align with the venture capital company’s recent crypto-focused investments into Aleo and OpenSea, amongst others. 

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