The Cryptocurrency Gap: Why Wall Street's Legacy Remains Reluctant

Bitcoin and cryptocurrencies appear to be on the verge of mainstream adoption, with inflows into US spot exchange-traded funds (ETFs) hitting record highs. Goldman Sachs holds more shares in BlackRock's cryptocurrency ETF than any other institution, and corporate treasuries from Strategy to Bitmine are embracing digital assets. However, a recent Bank of America survey revealed that three-quarters of global fund managers remain steadfastly resistant to dabbling in digital assets. Max Gokhman, deputy chief investment officer at Franklin Templeton, stated that these seemingly contradictory data do not stem from regulatory uncertainty or operational complexity, as these obstacles have largely been resolved. In an interview, Gokman said the skewed data stems from fear, misunderstanding, and the industry's deep-seated belief in legitimate investments. Gokman has been following how traditional finance responds to the digital asset revolution for years. He noted: "The biggest reason is that it often takes a while for a mature industry to realize it's fallen behind. This fear of the unknown is always there." The Management Paradox: Fund managers pride themselves on fulfilling their fiduciary responsibilities, but this protectiveness creates a paradox: the desire to protect client assets prevents them from accessing the investment opportunities that clients increasingly crave. According to Gochman, "Part of good asset management is understanding client needs. Individuals and institutions alike are increasingly interested in digital assets, but are finding their investment managers aren't actually offering solutions." This resistance stems from some deep-seated misconceptions. One view is that it's all overly speculative and worthless; another is that there's a lack of expertise to create legitimate investment solutions using digital assets. The Meme Coin Trap When Gochman encounters skeptical colleagues, the conversations follow a predictable pattern. Veterans of traditional finance will view Meme Coin as representative of the entire cryptocurrency ecosystem, revealing what he calls a superficial understanding. Just as the stock market ranges from blue-chip dividend stocks to speculative biotech stocks, digital assets range from established protocols that generate real returns to purely speculative tokens. His reaction has become natural: "Because you invest in stocks, does that mean you only buy penny stocks traded on the pink sheets? There are a lot of companies in high-yield bonds that most rational investors wouldn't touch. Most asset managers will tell you they hold emerging market stocks and distressed debt. It's a key asset class for them." Gochman emphasized that this skepticism is selective. Fund managers are comfortable with financial instruments like Venezuelan bonds, which have defaulted multiple times, but shy away from Bitcoin, which has never defaulted in 15 years. While fund managers debate the legitimacy of cryptocurrencies, the market is quietly shifting. Gokman cites data that undermines the retail-led narrative: 89% of Bitcoin trades on exchanges are over $100,000. He emphasizes: "That's not retail money. The market is becoming increasingly institutional." The Education Challenge Franklin Templeton's response includes a three-tiered outreach campaign targeting central bankers, institutional intermediaries, and retail investors. The crucial middle layer consists of large brokerage firms and platform owners, who control access to millions of clients but have little understanding of their needs. Gokman asked these players whether they had asked their clients whether they wanted cryptocurrencies. He added: "They might have an account on Coinbase and have the majority of their wealth there. And you have no idea what's going on." Traditional advisors often find their clients' wealth spread across multiple platforms, with professionally managed portfolios containing no representation of their clients' accumulated digital assets. Franklin Templeton's breakthrough lies in interpretation: expressing blockchain concepts in the language of traditional finance. In analyzing Solana, they didn't invoke revolutionary rhetoric, but rather calculated discounted cash flows. "If you actually pay fees on every transaction, like Solana does, we can project the growth of those transactions," Gochman explained. "Those are future cash flows. We can discount them to the present." This approach demystifies digital assets by applying a familiar analytical framework that any investor with basic valuation training can understand. It all comes down to yield. With the Federal Reserve's interest rate cuts looming, Gochman saw an opportunity. With traditional sources of income experiencing declining returns and institutions facing increasing pressure to generate revenue, cryptocurrencies offered an alternative. According to him: "Everyone needs income. Staking is a clear way to get that income. When people tell me they're worried this whole thing (cryptocurrency) is a scam, have you ever wondered if the government will just cancel all the debt? Because I've been there." The recent guidance from the U.S. Securities and Exchange Commission (SEC) on liquidity staking could be a turning point. For the first time, regulated products can offer staking yields without directly holding cryptocurrency. Gockman predicts that if a cryptocurrency ETF supporting staking is approved, this resistance won't last indefinitely. He predicts: "When we can give a yield, I think it will drive more adoption." This shift could suddenly accelerate. Institutional adoption typically follows a pattern of persistent skepticism until competitive pressures force mass action. A significant cryptocurrency divide persists between the 75% of fund managers who adhere to traditional frameworks and a growing coalition that recognizes the need to embrace technological change to serve their clients. The question isn't whether this gap will narrow, as economic pressures will ultimately drive acceptance. The question is which managers will lead the way and which will scramble to catch up.