Why more Australian institutional investors will look to hold crypto in the next decade

There's an important shift underway - one even crypto sceptics can no longer ignore. Until recently, crypto's standing amongst money managers was largely as a fringe asset - volatile, speculative, and too unruly for the buttoned-down world of institutional investing. But that world is changing, fast.

More institutions are waking up to the reality that crypto isn't going away. New routes to ownership are emerging - offering more regulated ways to access Bitcoin, from ETFs to a growing number of licensed custodians, and institutional-grade OTC desks.

Some of the most risk-conscious stewards of capital in the world have recently come aboard. The first spot Bitcoin ETFs was given the green light by the U.S. Securities and Exchange Commission in January 2024, and major asset managers BlackRock, Vanguard, and Fidelity have entered the market since. Charles Schwab, arguably one of the most conservative names in wealth management, is now offering crypto services. Sovereign wealth funds in Switzerland and Abu Dhabi are exploring digital assets. In the US, retirement market alone, crypto IRAs (individual retirement accounts) have grown to roughly US$10 billion and are forecast to hit US$100 billion in five years.

From my vantage point at Crypto.com, where we're in constant dialogue with investors, policymakers, and consumers across the globe, it's clear the next decade will see a surge in institutional allocation to crypto assets here in Australia. Our confidence is grounded in what's already happening overseas. Regulation is catching up, both here and globally - and, perhaps most importantly, Australians themselves are increasingly seeking crypto within their portfolios.

Every week I hear another story of how private investors - ordinary, risk-conscious Australians who might once have stood on the sidelines as natural sceptics - are embracing the asset class. Family offices are carving out allocations. High-net-worth individuals from diverse geographies and demographics have built substantial holdings.  I've met farmers in Gippsland, traders in Sydney, and everyone in between who are quietly accumulating crypto - and often without the benefit of financial advice because current regulations prohibit it.

Market research has shown that 31% of Australians now hold crypto - and among Gen Z, that number spikes to 50%. That's a staggering adoption rate. When half the next generation of superannuation members are already investing in crypto on their own, how long can super funds ignore that preference.

The conditions for institutional adoption are coming together - and growing public demand is part of the story. When millions of Australians already hold crypto, it becomes increasingly difficult for institutions to ignore. Advice is another frontier poised for change. Once financial advisers are permitted to speak credibly and legally about crypto allocation, we'll likely see a more formalised wave of investment follow.

We're also closely tracking the shift in political momentum - and how politicians are approaching regulation to enable, rather than hinder, investment. After years of stagnation, both major political parties have made moves. The recently sworn in Labor government has indicated it will introduce crypto legislation as a priority, setting the groundwork for digital assets to be brought under the AFSL regime.

That marks an important step toward making crypto 'portfolio-eligible' for super funds, insurers and other fiduciaries. Our core belief is that legislation must be introduced to Federal Parliament this year, to ensure that it doesn't slip further and provides a sense of assurance to the industry that Australia is committed to crypto.

Of course, institutions won't jump in blindly. Many are rightly cautious, waiting for a regulated framework and improved custody options. But the argument that crypto is 'too volatile' is losing its punch. Bitcoin, for example, increasingly behaves like a macro asset, similar to gold or other commodities. Its liquidity and decentralisation offer unique portfolio benefits - particularly in an era where traditional asset classes are increasingly correlated.

To be clear, this isn't about turning super funds into crypto funds. It's about recognising crypto as a valid slice of the alternatives bucket- like infrastructure, hedge funds, or private equity. AMP's recent move to include crypto within its alternatives exposure is an early signal. Others will follow, especially as ETF vehicles continue to simplify access and demystify custody.

Ultimately, the next wave of institutional crypto adoption in Australia won't be driven by hype. It will be driven by regulation, by consumer demand, and by the global convergence of traditional and digital finance. The question isn't whether it will happen - but how quickly.