Advisors ‘wary’ of bitcoin ETFs are on a slow adoption journey, says BlackRock exec

According to Samara Cohen, chief investment officer of ETF and index investments at BlackRock, financial advisors have been gradually adopting bitcoin ETFs since their launch in January. She notes that around 80% of bitcoin ETF purchases have likely come from self-directed investors who have made their own allocations, often through an online brokerage account. Cohen also mentions that hedge funds and brokerages have been buyers based on last quarter's 13-F filings, but registered investment advisors have been more cautious. Overall, Cohen says that financial advisors are wary of the new products, but this is their job as fiduciaries to their clients, and they are currently conducting risk analysis and due diligence.

Investment advisors have several concerns regarding the regulation and reputation of cryptocurrencies. Some of the key concerns include:

1. Price Volatility: Cryptocurrencies, such as Bitcoin, have experienced extreme price volatility, which can make it difficult for advisors to construct portfolios and perform risk analysis5.

2. Regulatory Compliance: The regulatory landscape for cryptocurrencies is constantly evolving, making it challenging for advisors to stay updated and ensure compliance with relevant laws and regulations.

3. Fraud and Scandal: Cryptocurrencies have gained a reputation for being associated with fraud and scandal, which can make advisors hesitant to recommend them to clients.

4. Lack of Track Record: As a relatively new asset class, cryptocurrencies do not have an extensive performance history, making it difficult for advisors to evaluate their long-term potential and incorporate them into client portfolios.

5. Security Risks: Cryptocurrencies are subject to security risks, such as hacking and theft, which can pose a threat to client assets and lead to potential financial losses.

6. Technological Complexity: Advisors may also be concerned about their own understanding of the complex technology underlying cryptocurrencies and their ability to effectively explain the risks and benefits to clients.

To address these concerns, financial advisors are encouraged to educate themselves about cryptocurrencies and the associated risks, stay updated on regulatory developments, and exercise caution when considering crypto investments for their clients.