That would mean that by advisors’ reckoning in Cerulli’s research, digital assets would contribute less than three-tenths of a percent of client portfolios in 2023.
Has The Time Come?
The report offered a number of reasons advisors might want to go ahead and embrace cryptocurrencies now anyway, however. One is that regulatory clarity is coming as more countries and agencies study the asset class. In the U.S., for example, a recent executive order signed by President Joe Biden has tasked federal agencies with studying and proposing coordinated policies for handling digital assets.
While the wait for a spot cryptocurrency ETF continues, advisors have other options to access digital assets on behalf of their clients, including a number of platforms that allow advisors to participate in direct crypto investing side by side with their clients.
Simultaneously, growth and innovation continues at an accelerating pace within the digital assets ecosystem as venture capital funding has recently posted large year-over-year gains, according to Cerulli, reaching more than five times the total funding of 2020 through just the first three quarters of 2021.
Advisors’ reticence to enter the crypto space should fade over time as regulatory clarity and cybersecurity concerns improve, Cerulli said, but they may not be able to afford the wait.
If they don’t enter the world of cryptocurrencies and understand cryptos as an asset class, advisors will lose assets from crypto-curious clients, Cerulli argued, and those clients will end up sating their appetite for digital assets by going through crypto-knowledgeable advisors, through exchanges like Coinbase, or via mobile applications like Robinhood.