Wealth managers and institutional investors believe that regulatory uncertainty is the largest barrier to building a digital asset allocation strategy, analysis from Brava Finance has shown.

While regulatory uncertainty came out on top, global wealth managers and institutional investors pointed to several other obstacles to digital asset strategies.

These included internal capabilities, client expectations, custody and security, and worries around volatility.

ESG or reputational concerns, a lack of trusted platforms, and an unclear value proposition were also cited as barriers.

When implementing a digital strategy, governance and internal sign off were causing the most concern, followed by vendor reliability, a lack of operational process, and technical complexity.

Brava Finance’s research found that professional investors were more concerned about feeling exposed to client or trustee criticism, or having to explain losses or volatility, than about digital assets being seen as speculative or having a lack of peer benchmarking.

When asked what would improve their confidence in allocating to digital assets or stablecoins, 68 per cent pointed to institutional adoption, ahead of demonstrated outperformance (55 per cent), better custody/insurance and simpler onboarding (both 53 per cent).

Although regulatory uncertainty was identified as the greatest barrier to building a digital asset allocation strategy, just 23 per cent of wealth managers and institutional investors said clearer regulation would encourage them to allocate more to digital assets.

“Our study shows that most institutional investors and wealth managers have identified digital assets as a credible alternative for delivering diversification and risk adjusted returns,” commented Brava Finance CEO and founder, Graham Cooke.

“Many of the barriers to investing in digital assets are caused by concerns about internal capability and the management of client expectations, and this may come from the pressure that client groups are exerting on investors to offer digital asset solutions.

“Despite these concerns, we anticipate continued growth over the coming years as digital asset allocations become a more established component of investment strategies.”

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