Is it a cognitive lag or a misjudgment of value? Decoding Wall Street's three main reasons for rejecting crypto assets

Despite record inflows into U.S. spot Bitcoin ETFs and growing institutional interest, a Bank of America survey reveals that 75% of global fund managers still refuse to invest in digital assets. According to Franklin Templeton's Deputy CIO Max Gokhman, this reluctance stems from three core issues:

Fear of the Unknown & Cognitive Lag: The traditional finance industry is slow to recognize it's falling behind, driven by a deep-seated fear of new and unfamiliar asset classes.
Misjudgment & Misconceptions: Many managers wrongly equate the entire crypto ecosystem with highly speculative meme coins, overlooking legitimate income-generating protocols. This selective skepticism contrasts with their comfort in holding riskier traditional assets like Venezuelan bonds.
Educational Gaps & Communication Barriers: Advisors often lack understanding of client demand and crypto fundamentals. Franklin Templeton addresses this by translating blockchain concepts into traditional finance language, such as using discounted cash flow models to value networks like Solana.

The growing pressure for yield, especially with potential Fed rate cuts, is making staking and other crypto-based income strategies increasingly attractive. Recent SEC guidance on liquidity staking could further accelerate institutional adoption once staking-enabled ETFs are approved. The divide between skeptical and adopting managers will likely narrow due to economic pressures, leaving the question of which firms will lead rather than if change will occur.

By Gino Matos, CryptoSlate

Compiled by Shaw Golden Finance

Bitcoin and cryptocurrencies appear to be on the verge of mainstream acceptance, with inflows into U.S. spot exchange-traded funds (ETFs) hitting record highs. Goldman Sachs holds more shares in the cryptocurrency ETF issued by BlackRock than any other institution, and corporate finance departments from Strategy to Bitmine are also embracing digital assets.

However, a recent Bank of America survey showed that three-quarters of global fund managers still firmly refuse to dabble in digital assets.

Max Gokhman, deputy chief investment officer at Franklin Templeton, said the seemingly contradictory data did not stem from regulatory uncertainty or operational complexity, as those obstacles have largely been resolved.

In an interview, Gokman said the skewed data stems from fear, misunderstanding and the industry's difficulty in letting go of its ingrained belief in legitimate investments.

Gokman has been watching 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 falling behind. This fear of the unknown is always there.”

Management Paradox

Fund managers take pride in fulfilling their fiduciary responsibilities, but this protectiveness creates a paradox: the desire to protect client assets prevents them from accessing the investment opportunities that their clients increasingly desire.

According to Gochman:

“One aspect of good asset management is understanding client needs. From individual clients to institutional clients, they are more interested in digital assets, but they find that their investment managers don’t actually provide relevant solutions.”

This resistance stems from some deep-seated misconceptions: one is that it’s all overly speculative and worthless, and another is that there’s a lack of people with the expertise to create legitimate investment solutions using digital assets.

Meme Coin Trap

When Gokman encounters skeptical colleagues, the conversations follow a predictable pattern: Veterans of traditional finance will dismiss Meme Coin as representative of the entire cryptocurrency ecosystem, revealing what he calls a superficial understanding.

Just as the stock market encompasses everything from blue-chip dividend stocks to speculative biotech stocks, digital assets range from mature protocols that generate real income to purely speculative tokens.

His reaction has become natural:

“Because you invest in stocks, does that mean you only buy penny stocks that trade 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 stressed that this skepticism is selective. Fund managers are comfortable with Venezuelan bonds, a financial instrument that has defaulted many times, but are hesitant to invest in Bitcoin, which has never defaulted in 15 years.

While fund managers continue to debate the legitimacy of cryptocurrencies, the market has quietly shifted. The data cited by Gokman refutes the notion of retail investors dominating the market: 89% of Bitcoin transactions on exchanges are for amounts exceeding $100,000. He emphasized:

“That’s not retail money. The market is becoming more institutional.”

Educational Challenges

Franklin Templeton’s response involved a three-tiered outreach campaign targeting central bankers, institutional intermediaries, and retail investors. The crucial middle layer consisted of large brokerage firms and platform owners, who controlled access to millions of clients but had little understanding of their needs.

Gokman asked these players if they had ever asked their customers if they wanted cryptocurrency. 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 that their clients’ wealth is spread across multiple platforms, and the digital assets accumulated by their clients themselves are not included in the professionally managed portfolios.

Franklin Templeton's breakthrough lies in interpretation: expressing blockchain concepts in traditional financial language. When analyzing Solana, they didn't invoke revolutionary rhetoric, but instead calculated discounted cash flows.

Gochman explained:

“If you actually pay fees on every transaction, like Solana does, we can project the growth of those transactions. 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 revenue

With the Federal Reserve's interest rate cut looming, Gokman saw an opportunity. With traditional sources of income facing 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 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 returns without directly holding cryptocurrencies.

Gokman predicts that this resistance won’t last indefinitely if a staking-backed cryptocurrency ETF is approved. He predicts:

“When we can show the benefits, I think it will drive more adoption.”

This shift could accelerate suddenly. Institutional adoption typically follows a pattern of persistent skepticism until competitive pressures force large-scale action.

A significant cryptocurrency divide remains between the 75% of fund managers who adhere to traditional frameworks and a growing consortium that recognizes the need to embrace technological change in client service.

The question isn’t whether the gap will narrow, as economic pressures will eventually force acceptance on all sides. The question is which managers will lead the way and which will scramble to catch up.