Should cryptocurrencies be included in personal portfolios?

Should cryptocurrencies be included in personal portfolios?

According to a survey by Natixis, the majority of investment professionals believe that individual investors should not own cryptocurrencies in their portfolios due to a lack of transparency and regulatory requirements.

The Natixis Investment Managers survey was conducted with investment professionals worldwide, including 166 fund selectors in North America. Among North American respondents, two-thirds (67%) said they didn’t think retail investors should be exposed to cryptocurrencies, and more than eight in 10 (86%) said financial investments needed to be more transparent. Another 84% believe they need to be subject to some form of regulatory oversight. However, that sentiment hinges on high demand for digital currencies like Bitcoin and Ethereum, particularly among younger investors — 40% of survey respondents said customers increasingly need cryptocurrency investments.

According to a CNBC survey released in August, more than 10% of investors own crypto and rank the digital currency behind real estate, stocks, mutual funds and bonds. Two-thirds of them bought in the last year, mainly due to how the asset is increasing slightly become acting. Now, supporters like Tesla and SpaceX CEO Elon Musk have also helped stoke crypto investor enthusiasm.

The Bitcoin futures product, which will be launched in October 2021, will provide additional impetus for individual investors.

However, investment professionals’ reluctance is largely due to the challenges they see surrounding cryptocurrency transparency and the lack of clear regulation, according to Dave Goodsell, CEO of Cryptocurrencies The Natixis Hub for Investor Insight.

According to Natixis Investment Managers, around 87% of survey respondents agree crypto assets need to be more transparent, and 84% believe they will need regulatory oversight.

“I think that makes it difficult to recommend things like this when they have a fiduciary role,” Goodsell said, citing the legal obligation some companies owe their customers. “I think that’s the reason for the hesitation.”

Around 70% also admit that their company needs more training on digital assets and cryptocurrencies before investing in them. However, the crypto hesitation goes beyond fund selection.

Financial advisors generally do not recommend that clients invest more than a small portion of their portfolio in cryptocurrencies due to their volatile nature. Bitcoin price has fallen to around $43,000/BTC from a recent high of $67,000 in November.

Although the above survey shows a lack of confidence among investment professionals, this is evident from the stories of NFTs that have sold for tens of thousands of dollars, said James Rockwood, CapIntel founder and CEO. million dollars and similar crypto investments are generating attractive returns, he believes it will be difficult for many investors to ignore or avoid the fear of missing out on a new asset class.

“The problem for advisors and financial firms is how to keep up with market trends while crypto regulation has yet to catch up,” Rockwood said.

Maybe cryptocurrencies and digital assets were not really interested by professional investors a few years ago, but the influence of these assets in the last 2-3 years cannot be denied. This begs the question, will cryptocurrencies become a major asset? And if it becomes an investment property, how will regulators regulate that?

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