How retail investors are making digital assets part of their lives

In brief

• Retail investors consider digital assets as a key component of their broader wealth strategy and plan to invest more in the next two to three years.
• Digital assets investor use cases and product needs are expanding, creating opportunities for both TradFi and crypto-native firms.
• Areas of opportunity include providing wealth management, access to funds, wallet and trading capabilities, supporting payments, and more.

Cryptocurrencies have captured both headlines and the imaginations of investors for nearly a decade. Now, a surge in retail investor demand is creating new opportunities for wealth managers and banks, merchants, and crypto native firms alike. An EY-Parthenon survey of more than 1,000 retail investors shows that 64% already invest in digital assets or related products, while another 69% plan to increase investment in digital assets over the next two to three years. But what are these investors most interested in, and what are their allocation plans? Understanding where demand is most likely to grow — from wealth services to payments to registered vehicles — will arm financial institutions and FinTechs to capitalize on rising retail investor interest.

While many thought that digital assets were just a novelty, some saw a new asset to invest in and have leveraged the technology to improve speeds, reduce costs, and redistribute value across our financial infrastructure. Underpinning this movement has been the retail investor. Whether it was to create wealth or to promote the democratization of money, cryptocurrency has been supported by a loyal following of individual investors holding bitcoin (BTC), Ethereum (ETH), and alt coins directly. Retail investors expect to increase allocations, seek new services from traditional financial firms, embrace tokenization and experiment with new use cases to take digital assets beyond the mere store of value. Financial firms and merchants will be successful in capturing these new customers through expansion of services retail investors demand around payment systems, wealth management, retirement planning, trading, custody, and lending products connected to digital assets.

Download the full survey here: How retail investors are making digital assets part of their lives

EY-Parthenon’s third annual global retail survey, including a mix of accredited and non-accredited investors* and conducted in March 2024 just after the approval of a series BTC Exchange Traded Products (ETPs), aimed to better understand the perspectives, sentiment and allocations of these investors.

Retail investors are believers in the digital assets’ opportunity

Long-term belief in the staying power of digital assets continues to increase for the retail investor. On average, 72% of those who have invested in digital assets consider digital assets a key component of their wealth building strategy, with 83% of accredited investors who have invested in digital assets holding this sentiment. While investors have been comfortable with direct investments in digital assets through crypto exchanges and FinTechs (43% percent of investors plan on investing in spot crypto this year), around 40% plan to seek out mutual funds, ETP, funds, and trusts that invest in digital assets. In general, there is a desire to gain more exposure through traditional financial institutions. For instance, three-quarters of investors plan on seeking professional financial advice regarding crypto, and there is a wider preference for engaging with Traditional Finance (TradFi) firms to include digital assets as part of an overall portfolio planning strategy.

Investors plan to increase their investments in digital assets funds over the next 2–3 years

Digital assets are becoming a greater piece of a new financial reality

While the narrative of “bitcoin as digital gold” remains, investors are beginning to engage in a broader range of use cases and acknowledge the blurred line between crypto as an investment and a monetary instrument. In fact, between 2022 and 2024, investors noted an increase in “active” (beyond buy and hold) uses of digital assets as use cases expanded. Not only have investors seen a greater interest in leveraging digital assets for payments, but they also report a 16% increase in usage for staking, an 11% overall increase in using digital assets to participate in DeFi platforms, and a 6% increase in payments.

Investors suggest increasing active usage of crypto, including 17% increase in DeFi¹, 16% in staking, and 6% increase in payments

At the same time that these novel use cases are emerging, the approval of ETPs has shifted some future attention away from spot ownership toward registered vehicles. Fully 57% of investors show a preference for gaining exposure to digital assets through a registered vehicle, with the primary reason being they feel funds offer more consumer/regulatory protections (58%). Other important reasons noted include being able view their assets in the same portfolio as their other investments (54%) and trusting the asset managers that issue the funds (44%). While there is general excitement for the advent of more traditional means for investing in digital assets, there is some disparity in enthusiasm between accredited and non-accredited investors. Accredited investors show significantly more excitement, with 67% seeing registered vehicles as more attractive vs. 39% of non-accredited investors. At the time the study was fielded, 78% of accredited investors expected to invest in a future Ethereum ETP while 55% of non-accredited planned to do the same. Several ETH ETPs have since been approved in May 2024, enabling new product opportunities for asset managers and new product offerings for wealth managers/Registered Investment Advisors (RIAs).

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