Financial advisors who have long stood at the edge of the crypto conversation may find the moment for action is no longer coming—it’s already here. A new report from Grayscale on high-net-worth (HNW) investors suggests that digital assets, once considered a speculative play for tech-savvy millennials, have gained traction among affluent older investors. With regulatory headwinds shifting into tailwinds and innovative products like income-generating crypto exchange-traded funds (ETFs) emerging, advisors have both the tools and the need to integrate digital assets into client portfolios.
In an interview with The Wealth Advisor’s Scott Martin, John Hoffman, Managing Director and Head of Distribution and Partnerships at Grayscale Investments, discussed the firm’s latest research on high-net-worth investors, the evolving regulatory environment, and how Grayscale’s crypto ETFs are designed to meet diverse client needs.
A Surprising Adoption Curve Among Affluent Investors
Grayscale’s recent research, conducted with the Harris Poll, paints a very different picture of the typical crypto investor than many advisors may expect. Although it’s widely assumed that digital assets skew young and speculative, Hoffman explains the numbers tell a broader story.
“One in five Americans own crypto, but within the high-net-worth category, one in four own crypto,” Hoffman says. “This is not just a mass market or applicable to the mass affluent, but rather, it’s really finding its place in the high-net-worth category as well.”
The HNW-investor adoption is accompanied by a notable generational spread: 26% of Americans with investable assets of $1 million or more now own crypto, exceeding the 21% national average. Among those over age 50, a compelling 78% say the current economic climate has heightened their interest in crypto. At the same time, 78% of high-net-worth individuals under 50 now express active interest in investing in the space.
The trend line points forward. Nearly two in five HNW investors (38%) say they expect crypto to be part of their future portfolios—including more than half (53%) of those under 50 and 22% of those over 50.
Motivations ranging from macroeconomic conditions to financial markets’ evolution are driving the interest. More than one-third (36%) of HNW investors are paying closer attention to Bitcoin and other digital assets as a result of geopolitical tensions, inflation, and concerns about the weakening U.S. dollar. Even more telling: 34% say the approval of spot Bitcoin ETFs in early 2024 has piqued their interest.
The wider engagement among wealthy investors signals a significant opportunity for financial advisors. If nearly half of wealthy older investors are waiting on the sidelines for additional policy guidance, the moment that clarity arrives could trigger a flood of new allocations. Advisors who are prepared with actionable strategies will be best positioned to capitalize on the regulatory shift.
Regulatory Oversight: From Barrier to Catalyst
A lack of regulation has long been the biggest deterrent to entering the digital assets industry for advisors and clients alike. Hoffman acknowledges the historical friction but emphasizes that the environment is changing.
“That headwind in the past to this adoption of the technology has been around lack of clarity on the regulatory side, and that’s starting to dissipate,” he says. “This new administration has really started to provide clarity and more importantly engage with the crypto ecosystem.”
Grayscale has been at the forefront of regulatory developments, most notably with the conversion of its Grayscale Bitcoin Trust ETF (ticker: GBTC) into a spot Bitcoin ETF in January 2024. Originally launched in 2013 as a private trust and later publicly traded on over-the-counter markets, GBTC became the first U.S.-listed spot Bitcoin ETF following its conversion and listing on NYSE Arca. This groundbreaking milestone set a precedent that other major asset managers have since followed—and legitimization of crypto through regulated, familiar vehicles is helping advisors overcome former reputational and compliance concerns.
Hoffman underscores the inflection point: “We’ve moved from an environment where there’s been a dampener on this or really an inhibitor of this technology to now one that is constructive and additive.”
The regulatory evolution not only unlocks client demand but flips the risk dynamic for advisors: the reputational and regulatory risks of engaging with crypto are now rivaled—if not surpassed—by the risks of omission.
Risk Reversal: Advisors Face a New Set of Priorities
Crypto has been a volatile and often controversial asset class over the course of its journey from fringe fad in 2009 to mainstream investment vehicle today. Along the way, the fundamental risk calculus has been changing, and advisors who fail to recognize the shift may find themselves out of sync with their clients’ expectations.
“Bitcoin has been the best-performing asset in the world over the last decade. GBTC has had an over 50,000% return since inception,” Hoffman says. “Despite that return, the wealth channel again has largely been under-allocated to crypto because historically there’s been high career risk, high reputation risk, high regulatory risk.”
With emerging policy coherence and new ETF products, Hoffman argues, the perception of crypto as a professional liability is increasingly outdated. Advisors now have a chance to position themselves as forward-thinking custodians of client capital—especially as clients come armed with questions and independent holdings.
“Clients are looking for their advisor to help them navigate this new technology,” Hoffman says. “We’re really starting to see that in client engagement, the number of advisors that are reaching out to Grayscale and seeking to partner as they look to navigate this next chapter of crypto.”
Advisors who lean in now can become the reliable resource their clients are already seeking—and potentially avoid losing assets to self-directed platforms or competitors who are more responsive to the demand.
Income Innovation: Meeting Investors Where They Are
Grayscale’s efforts to make crypto more accessible and functional for a broader investor base go well beyond spot ETFs. The firm’s recent product launches are engineered to align with a range of investor goals—including income generation.
Among the firm’s offerings, the Grayscale Bitcoin Mini Trust ETF (ticker: BTC) stands out as the world’s lowest-cost Bitcoin exchange-traded product, with an annual fee of just 0.15%. BTC aims to provide direct Bitcoin exposure in a simple brokerage-accessible format, making it an easy entry point for advisors looking to test the waters.
Complementing the straightforward Bitcoin exposure is BTCC, the Grayscale Bitcoin Covered Call ETF. As Hoffman explains, the strategy transforms one of Bitcoin’s defining characteristics—its volatility—into monthly income through a covered call writing strategy.
The ETF writes at-the-money calls on Bitcoin positions and distributes the premium income to investors, “turning the volatility of the asset class into something productive,” he says. For yield-seeking clients, this strategy might introduce a new revenue stream for Bitcoin in portfolio construction.
Grayscale’s innovative product lineup is designed to allow financial advisors to tailor digital asset allocations to a wide array of client objectives—from long-term appreciation to cash flow management—without the operational friction of managing private keys, wallets, or unfamiliar platforms.
Still Early: Long-Term Potential Remains Vast
The natural question for any advisor hearing about 50,000% historical returns is: Has the crypto opportunity already passed? Hoffman doesn’t think so.
“We’re 16 years in, but when you think about it from an adoption perspective, we’re still in the very, very early innings of global adoption,” he says. “This is an exponential technology. So, the adoption is nonlinear, it’s exponential.”
Drawing a parallel to the early internet era, Hoffman notes that just 0.4% of the global population was online 13 years after TCP/IP, the protocol that powers the internet, launched in the early 1980s. Today, internet penetration exceeds 96% in the U.S. Crypto, he suggests, may follow a similar rapidly advancing arc.
“We can push a button, and a package arrives from Amazon. Push another button, and an Uber car arrives. That’s the promise we got in 1982,” Hoffman says. “But it took about 40 years to recognize that promise. Think about this in the context of Bitcoin starting in 2009.”
As of 2024, only about 5% of the global population owns Bitcoin, he adds. Continued adoption could put crypto on a trajectory far beyond today’s $3 trillion market cap—potentially surpassing $10 trillion, with no clear upper bound.
Stablecoins and the Broader Blockchain Ecosystem
While Bitcoin often dominates the crypto conversation, advisors shouldn’t overlook developments in other segments of the digital asset ecosystem—particularly stablecoins.
“If you’re looking for the killer use case of crypto as a currency, the stablecoin market is where you should be looking,” Hoffman says.
With daily transactional volume now rivaling or surpassing that of MasterCard and Visa, stablecoins are becoming foundational infrastructure for global payments and commerce. For forward-looking advisors, understanding stablecoins may be just as crucial as understanding Bitcoin.
The Advisor Advantage: Why Partnership Matters
As crypto digs deeper into the mainstream, financial advisors are uniquely positioned to bridge knowledge gaps and help clients adopt digital assets responsibly. Grayscale recognizes the opportunity and is focused on supporting advisors directly.
“We don’t believe everybody should have crypto in a portfolio, but we want to be your partner as you navigate the complexities of this asset class,” Hoffman says. “This is the first new asset class that humanity has seen in 165 years, and there’s a lot of complexity to it. Our goal is to simplify that complexity.”
Resources including in-depth research, product explainers, and automated updates are available through Grayscale’s website, helping to give advisors a confident understanding of the digital assets world and the tools to have informed conversations with clients.
As adoption accelerates and clients ask tougher questions, advisors must decide whether to respond with insight or inertia. For those ready to take the lead, Grayscale is clearly betting on the advisor channel to shape the next phase of crypto’s evolution.
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