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Since Bitcoin was created as an alternative currency system in 2009 cryptocurrencies have divided the generations. Many older investors remain mistrustful, keep their wealth in traditional assets such as the stock market, real estate and gold. But millennials, born roughly between 1980 and 1995, have been quick to embrace the concept of digital currencies.
That confidence has paid off in a big way. Early adopters in particular have amassed huge fortunes through the rocketing price of Bitcoin, Ethereum and other cryptocurrencies, as they have become more mainstream. According to the latest CNBC millionaire survey, 53 per cent of US millennial millionaires have at least half their wealth in cryptocurrencies.
The survey finds that 83 per cent of millennial millionaires own crypto. But in contrast, only 4 per cent of baby boomers or older millionaires hold any cryptocurrency at all. However, Mike Novogratz of crypto firm Galaxy Digital says resistance may be crumbling among older investors. He believes digital assets could attract up to $1tn this year as crypto products become more widely available for wealthy clients.
Private banks, trading platforms and wealth managers are increasingly offering access to crypto investing. Leading names include Goldman Sachs, Wells Fargo, State Street, Barclays and BBVA Switzerland. But the cryptocurrency industry has work to do if it is to build broad-based trust. Crypto scams cost investors $1.9bn in 2020, according to crypto analytics firm CipherTrace. There are also money laundering and terrorist financing concerns.
In the UK, for example, the FCA has warned that many cryptocurrency businesses are not meeting anti-money laundering standards. So far, around 30 firms have successfully registered with the regulator allowing them to operate legally in the UK with a similar number of applications being assessed.