BlackRock’s chief investment officer for ETF and index investments, Samara Cohen, has mentioned that financial advisors are still hesitant about using Bitcoin exchange-traded funds (ETFs) despite their success. Even though Bitcoin ETFs have attracted more than $50 billion in investments since January 2024, they are not being widely adopted by financial advisors.
Cohen explained that around 80% of Bitcoin ETF purchases come from self-directed investors who make their own decisions through online brokerage accounts. Financial advisors are being cautious because they have a responsibility to their clients when it comes to recommending investment options. Due to Bitcoin’s history of price volatility, advisors are carefully considering its role in investment portfolios and deciding on suitable allocations based on the investors’ risk tolerance and liquidity requirements.
The fluctuating nature of Bitcoin’s value and the limited track record of Bitcoin ETFs contribute to advisors’ doubts about their reliability and long-term performance. In addition, the lack of a clear regulatory framework for cryptocurrencies in the financial sector adds to the uncertainty surrounding Bitcoin ETFs, making advisors hesitant to recommend them to clients.
Despite these challenges, Bitcoin ETFs offer a regulated and more accessible way for investors to enter the cryptocurrency market. However, the slow adoption by financial advisors highlights the importance of increasing education and awareness to overcome existing obstacles.
The approval of Bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC) has had a significant impact on the cryptocurrency market, particularly with issuers like ARK and 21Shares. These issuers are now seeking approval for Ethereum ETFs, attracting investor interest in the second-largest cryptocurrency by market capitalization.
SEC Chair Gary Gensler has expressed caution about the classification of most crypto assets as investment contracts under federal securities laws, a shift from the previous focus on commodities and futures aspects. This regulatory change adds complexity to the approval process for Ethereum ETFs, which operate differently from Bitcoin.
Despite the challenges, Gensler anticipates approving spot Ether ETFs by the end of summer 2024. The SEC has already given initial approval to a group of ETFs, and the final registration requirements are being processed, allowing for the listing of new ETFs holding actual Ether for easy trading.
In a budget hearing before the Senate Appropriations Committee, Gensler highlighted the progress in registering these ETFs, noting that individual issuers are moving efficiently through the registration stages. This progress indicates a positive step towards the approval and listing of Ethereum ETFs, providing investors with further opportunities in the cryptocurrency market.