Considering A Career Move Or Pension In Crypto? Crypto's Overdue Respect

Forbes

a day ago

Young stock trader shows executive managers cryptocurrency and market correlation on wall TV.
It is estimated that over 55 million Americans use cryptocurrencies, 20% of the adult population. Europe has an estimated 31 million cryptocurrency users, 25% of the adult population, and in the U.K. its 12% of the of the adult population, or 4 million adults.
Africa has 38 million users, Latin America has 55 million users, and Asia, comprising 48 counties, has 263 million users.
Crypto is moving into the mainstream globally and the broad acceptance of digital assets is accelerating.
The U.S. Administration's pro-crypto stance is certainly delivering greater regulatory clarity with the Genius Act for stablecoins and the SEC's Crypto Task Force. SEC Chair Paul Atkins says the self-custody of crypto is a fundamental American right, linking it to personal freedom and property control.
Greater regulatory clarity is welcome, and it is increasingly clear that there is a growing change of attitude towards cryptocurrencies among many global regulators driven by a range factors including the prospect of greater economic growth, financial inclusion and wealth creation opportunities for citizens.
The markets have witnessed Circle's eye watering IPO and share price which is helping to drive the path to IPO for crypto exchanges like Kraken, Gemini and Bullish.
It is difficult to not conclude that cryptocurrencies and digital assets are becoming respectable.
A Career In Crypto Is Now Cool With The Establishment
By many estimates, almost half of the professionals working in crypto and digital assets come from TradFi capital markets, top tier banks to asset managers.
There has always been somewhat of career risk for TradFi talent working in crypto, especially enduring the hostility by some policymakers and regulators over the past few years.
Institutional investment is now piling in crypto - it is estimated that institutions now hold 25% of the U.S. bitcoin ETF market - and this is making crypto more respectable and driving a requirement for TradFi talent that is willing to stake its career on working in the burgeoning digital assets industry.
New research by leading European digital assets hedge fund Nickel Digital Asset Management shows that is changing. Nickel Digital itself was founded by an alumnus from Bankers Trust, Goldman Sachs, and JP Morgan.
The research surveyed institutional investors and wealth managers in the U.S., U.K., Germany, Switzerland, Singapore, Brazil and the United Arab Emirates who collectively manage over $1 trillion in assets.
More than half (53%) surveyed believe the career risk for executives in the crypto industry has fallen under the Trump Presidency with 17% saying it has significantly reduced. Around a third (33%) say the risk has increased with only 1% say it has significantly increased.
Mitigating career risks depends largely on regulation of the sector. More than four out of five (83%) questioned said it is extremely or very important in reducing career risk when investing in digital assets with 30% saying it is extremely important.
Anatoly Crachilov, ceo and founding partner at Nickel Digital, says, 'The mainstream adoption of digital assets pioneered by firms such as BlackRock, Fidelity, and Goldman, has been turbo-charged by the Trump presidency and the fear of career risk is receding, driving greater engagement by traditional allocators.
'Robust regulation is central to the growth of the sector but there are more practical issues to be addressed including deeper liquidity and improvements to market infrastructure that will mitigate counterparty risks concerns.'
Pension Funds Are Allocating To Cryptoassets
Defined benefit and hybrid pension scheme specialist Cartwright has announced the first bitcoin allocation into the investment portfolio of an unnamed U.K. pension scheme. It described the investment as 'a strategic move that, not only offers diversification, but also taps into an asset class with a unique asymmetric risk-return profile.'
The Cartwright announcement was denounced as 'deeply irresponsible' by some commentators, pointing to the cautionary tale of the Ontario Teachers' Pension Plan writing down its $95 million investment in FTX following its bankruptcy.
This criticism is misplaced as the FTX bankruptcy was pure human fraud and nothing to do with cryptocurrencies, a cryptocurrency investment, or new blockchain digital technologies.
U.S. pension schemes however are not worried. Schemes in Wisconsin and Michigan are major investors in crypto ETFs which are regulated. Texas, Ohio, Pennsylvania and Oklahoma are looking at establishing bitcoin reserves.
Zodia Markets Ireland chair Michael Walsh estimates that 1% of crypto ETFs are being bought by U.S. pension funds which sounds small, and adds '1% of a $100 billion market might not seem significant but it represents over a billion dollars with substantial room for growth.'
The growth potential in the crypto ETF market is obvious and the direction of travel seems to be up. BlackRock's iShares Bitcoin Trust (IBIT) recently bought $970 million Bitcoin in a day and now holds over $56 billion in assets. It is estimated to hold 3% of the total global supply of bitcoin.
Blackrock's IBIT is the one of the hottest ETF tickets in the market, overtaking its S&P 500 ETF in annual revenue.
BlackRock ceo Larry Fink has talked about bitcoin replacing the U.S. dollar as the world's reserve currency due to potential concerns about rising U.S. Government debt, especially following the fresh passage of the new budget bill.
With record U.S. debt, weak bond auctions, and the weakest dollar since the 1970s, the threat of the U.S. debt default is looming on the mind of foreign debt holders, with some foreign asset managers publicly stating they are now overweight in both U.S. debt and equity.
Respectability And Engagement Breeds Success
The Nickel Digital research among firms already invested in digital assets shows growth in crypto markets is driving increased respectability. Markets can drift but as long as they are not crashing there is a continuing confidence that builds over the the longer-term.
Nearly nine out of 10 (88%) questioned say they will increase their level of investment in digital assets this year, building on the 67% who said they increased investment in the last year. They expect major investor groups to follow suit.
Around 70% predict pension funds will dramatically increase investment in digital assets over the next two years while 57% believe wealth managers will dramatically increase investment and 40% say the same about family offices.
Most are increasingly positive about the outlook for digital assets as they increase their understanding of the industry with 90% positive on digital assets as an asset class and 13% saying they are very positive. None of the organisations surveyed were negative on the current market with 10% saying they were neutral.
Part of the growing confidence is due to deeper engagement with the digital asset industry and a greater understanding of the investment benefits beyond investment returns. Nickel Digital's research asked professional investors to rank the benefits of investing in the industry.
The ability to trade 24/7 and the efficiency of the DeFi ecosystem are rated as the two major benefits of investing in the sector ahead of the prospect of better returns than other asset classes, which was rated third.
Capital appreciation and the role of digital assets as a hedge against currency depreciation were ranked fourth and fifth ahead of yield opportunities and their role as a hedge against inflation. Arbitrage opportunities and low correlation to other asset classes were ranked eighth and ninth.
Crachilov stresses the importance of regulation saying, "Regulators play a critical role in supporting the evolution of the digital asset sector. While no regulatory framework can eliminate all possible risks, investors appreciate value of global regulators' drive for transparency, accountability, while, at the same time, providing constructive approach to regulation in the crypto sector."
The research found 88% believe the risk of another FTX-style scandal has been reduced with more than a third (35%) saying it has fallen sharply. A similar study in July 2024 by Nickel Digital found 75% believed the risk had dropped with 20% saying it had fallen sharply.
Confidence in regulation and growing respectability is encouraging more firms to engage. 43% of institutional investors and wealth managers questioned believe there will be a dramatic increase in traditional financial firms launching crypto funds and investment solutions over the next two years.
That increasing involvement by traditional institutions is good news for the sector with nearly one in five (18%) say the involvement of major firms is very positive for the sector and 74% saying it's quite positive.
Performance is key – investors questioned believe crypto will be one of their top five asset classes for risk-adjusted returns over the next five years. Private equity was the next most selected followed by emerging market (EM) equities – EMs have become popular destinations for those asset allocators overweight in U.S. equities.
Crypto's journey to respectability has been a long one. There will be bumps in the road ahead, though the threat of the next crypto winter in the short term appears a lower probability to most crypto analysts and pundits. Many TrandFi analysts and pundits are not as sure they can say same the same about traditional markets.