After recent studies by Fidelity and Evertas highlighted the rising interest in digital currency among institutions, the latest poll by Bitwise Asset Management showed responses that were just as optimistic. The crypto index fund partnered with investment website ETF Trends last month to speak to nearly 1,000 U.S.-based financial advisors about their stance on crypto.
Perhaps the most important takeaway of the survey was that the amount of money managers who bought cryptocurrencies in their clients’ portfolios grew by 50% compared to a year ago. The majority of the respondents pointed to last year’s hit on the global economy as a reason for turning to an alternative asset class. 54% cited cryptocurrencies’ lack of correlation with other assets as a primary benefit, while a quarter of them views wealth preservation as the most important perk.
In last year’s survey, only 9% of respondents accepted crypto’s utility as an inflation hedge, pointing to growing concerns over fiat debasement and free-floating money. Interest among both clients and portfolio managers themselves has likewise increased over the past 12 months. 81% of the surveyed financial advisers said their clients inquired about crypto sometime last year, compared to 76% in 2019.
Finance professionals buy crypto for themselves, too
15% of investment advisers said that they are likely to invest in crypto in their personal portfolios this year, while 2% said they are certain about it. Financial planners were more secure in their decision, with 24% stating that they have already created some kind of personal crypto exposure. Furthermore, the number of cynical skeptics who expect Bitcoin’s price to plummet to zero dropped from 14% in 2019 to 4% this year.
9.4% of client portfolios among the survey’s participants were exposed to crypto at the time of the poll, compared to 6.3% a year ago. While a promising increase, Bitwise’s CIO noted that the figure shows that crypto is still in its early stages despite this second, more prominent and mainstream, boom. The survey’s results suggest crypto adoption among portfolio managers could more than double over the coming year.
Also of note in this survey, 58% said they’d be more likely to invest in cryptocurrencies given a clarified regulatory environment. Coincidentally…
U.S. gets first truly crypto bank
Predictions such as these are firmly backed by positive developments in institutional crypto solutions. After securing a national trust charter by the U.S. Office of the Comptroller of the Currency (OCC), crypto custodian Anchorage recently became the first true digital asset bank in the U.S. The charter, which the OCC described as rigorous in criteria, will allow Anchorage to store, manage and trade both stablecoins and various cryptocurrencies.
The approval was expedited by Acting Comptroller of the Currency Brian Brooks, who has repeatedly expressed his desire to bridge the gap between traditional banking and blockchain finance. Recently, Brooks issued a statement to all U.S. banks encouraging the use of blockchain payments as a 21st century alternative to legacy electronic payment systems like ACH, SWIFT, and FedWire.
While Avanti and Kraken hold state banking charters, their legal position is somewhat ambiguous. Both offer specialized cryptocurrency-focused services – in fact, Kraken started out as a crypto exchange before receiving its charter.
In contrast, Anchorage has received a federal trust charter. While that doesn’t include FDIC insurance on savings and checking accounts, Anchorage CEO Nathan McCauley told Fortune the bank has engaged insurance giant Aon for coverage of deposits.
Anchorage potentially doubles American access to cryptocurrencies
Here’s why this is important: a federally-chartered bank opens up the world of cryptocurrency investing to hundreds of other banks. Instead of seeking OCC approval for their own decentralized finance operations, they can simply partner with Anchorage and immediately offer a full suite of crypto options like buying Bitcoin to their own customers.
If you thought Paypal’s decision to allow its customers to buy crypto brought in a huge wave of interest and new investors, imagine everyone with a bank account suddenly having access to cryptocurrencies. The potential crypto market would nearly double:
- 16% of Americans own crypto
- 58% of Americans have a Paypal account
- 95% of Americans have a bank account
With legislation and adoption moving so quickly, maybe we shouldn’t be surprised that the number of participants in Bitwise’s survey who forecast six-figure Bitcoin prices over the next five years rose nearly 400%.