April 5, 2022 | Stamford, CT — The creation of a spot Bitcoin ETF will help overcome hesitations among traditional financial advisors about recommending cryptocurrencies and could potentially bring countless retail advisory clients and billions of dollars in assets into crypto. 

Nearly half the U.S.-based financial advisors participating in a new Coalition Greenwich study say an SEC decision to allow the creation of a spot Bitcoin ETF would make them more willing to suggest a cryptocurrency allocation to clients when appropriate for the client’s risk profile. In October 2021, the SEC approved Proshares’ Bitcoin Strategy ETF (BITO), the first futures-based Bitcoin ETF. Since then, the SEC has denied multiple applications from other firms to launch spot Bitcoin ETFs.

“Despite the fact that buying Bitcoin is now quite easy for retail investors through a number of trading apps, the ability to gain that exposure through a traditional investment vehicle, traded and held by a traditional broker-dealer or investment firm, would provide tremendous comfort to many,” says Kevin McPartland, Head of Research in the Coalition Greenwich Market Structure and Technology group and author of Retail Investors Want Crypto, but Advisors Face Roadblocks.

Fully 80% of financial advisors participating in the study support the creation of a spot Bitcoin ETF. One big reason for this enthusiasm is that their clients are interested in cryptocurrencies and two-thirds of financial advisors have spoken to clients about crypto investing. 

“Despite these conversations, 85% of advisors do not or cannot make this investment option available—a stark supply/demand imbalance,” says Kevin McPartland. 

Changing the status quo will require more than an SEC reversal and the launch of a spot Bitcoin ETF. Currently, only 15% of financial advisors have created an investment strategy or offered an investment product to a client involving Bitcoin or another digital asset. Most advisors are not offering these options because of their firms’ policies while others advisors are holding back due to questions about fiduciary responsibility.

“Fiduciary responsibility will never and should never change,” says Kevin McPartland. “However, more regulatory clarity, more regulated investment vehicles and technology enabling easier access will likely set the stage for increased crypto-asset allocations in the coming year.”