The number of advisors planning to recommend digital assets in the coming months has surged since last year, according to a survey released by Franklin Templeton.

The March survey released by Franklin Templeton Digital Assets found that 35% of advisors plan to recommend digital assets to their clients sometime over the nex six months, which is up from 21% in December.

However, the number of respondents currently recommending crypto to clients fell sharply in the survey to 34%, from 59% in the December poll.

The report attributed the fall to firms issuing “new guidance to advisors during their due diligence process of evaluating the new spot bitcoin ETFs.”

"Advisors increasingly express interest in allocating towards digital assets as a means of better diversifying their clients' portfolios and capturing the investment opportunity represented by the growing protocol-based network economy," added Sandy Kaul, head of Digital Asset & Industry Advisory Services at Franklin Templeton.

The survey was conducted by the Digital Assets Council of Financial Professionals (DACFP), which is devoted to educating financial professionals about digital assets. The group surveyed 272 advisors, 71% of whom were independent advisors. Sixty-five percent of the respondents reported serving clients with $500,000 to $3.5 million in assets.

Franklin Templeton announced last week that it partnered with DACFP to launch an online digital assets education course for financial professionals, called Discovering Digital Assets: Blockchain, Bitcoin and Beyond.

Ric Edelman, who is the founder of DACFP, said the recent introduction of spot bitcoin ETFs may be one of the reasons for the increased interest in crypto among advisors.

"The availability of new spot bitcoin ETFs, combined with a roughly 50% increase in bitcoin's price so far this year, is spurring advisors to get more involved with crypto than ever," he said. "Advisors are racing to gain the knowledge they need to properly serve their clients."

The survey comes after a report by Bitwise Asset Management that RIAs have bought $3.5 billion in spot bitcoin ETFs so far with year. Edelman has predicted that the price of bitcoin will hit $420,000 by 2030. It traded at $69,000 Monday.

Among advisors recommending the digital assets, 87% are telling clients to allocate 1% to 5% of their assets, with 2% being the most common allocation being suggested. 

Kaul told Financial Advisor that she sees 2% as a wise allocation, but she also thinks the percentage will increase as advisors get comfortable with the asset class and their understanding deepens.

“There's a great appetite to diversify retail and wealth portfolios away from just equities and bonds into more alternatives,” she said. "But alternatives can be very illiquid. I think that what people are going to come to realize is that the bitcoin ETF and these other crypto products are ... a very liquid alternative asset class. So, investors can get their money out anytime they want.”

They can also invest in bitcoin for as little as a $1, she noted.

"As advisors and their clients progress through their respective digital assets journeys, it is important they choose a partner capable of conducting research, development and education across the entire digital assets ecosystem,” she said in the survey release.

It's also important that advisors and investors recognize some of the risks of crypto investing. The report noted “a rapidly evolving regulatory landscape ... which might result in security, privacy or other regulatory concerns.”

“The biggest risk is that there is still no clear regulatory framework for Bitcoin,” Kaul said. “Therefore, you could see rules come out that people are not anticipating…and becoming upset. Without regulatory clarity, there's always uncertainty, right? Yes.”