As Bitcoin continues to gain mainstream appeal, new research led by Pouyan Esmaeil Zadeh, associate professor of information systems and business analytics at FIU Business, uncovered what motivates individual investors to adopt regulated cryptocurrency investments like Spot Bitcoin Exchange Traded Products (ETPs).
The study, published in the Journal of Risk Management in March 2025, surveyed 428 U.S. investors and analyzed the impact of three key forces on Bitcoin ETP adoption: individual traits, market dynamics and government regulations.
“We wanted to understand why people might feel more comfortable investing in Bitcoin when it’s offered through familiar, regulated channels,” said Esmaeil Zadeh. “There’s a big difference between managing your own crypto wallet and buying spot Bitcoin Exchange-Traded Funds (ETFs), a type of ETP, on the Nasdaq.”
Approved by the U.S. Securities and Exchange Commission (SEC) for the first time in early 2024, Spot Bitcoin ETPs allow investors to gain exposure to Bitcoin without directly owning or managing it. The new financial products are seen as a safer, more accessible alternative for retail investors previously deterred by technical barriers, volatility or tax uncertainty.
According to the study, digital literacy emerged as the top predictor of adoption – even more than financial literacy.
“That was surprising,” said Esmaeil Zadeh. “People who are more comfortable with technology, who keep up with innovations and understand digital platforms, are significantly more likely to invest in Bitcoin ETPs than those who just have strong financial knowledge.”
Government oversight also plays a pivotal role. Transparent compliance guidelines, tax clarity and SEC backing all increase investor trust and willingness to engage with Bitcoin through regulated platforms, the study showed. Esmaeil Zadeh emphasized that unlike traditional Bitcoin purchases, these ETPs come with full disclosure of fees, risks and transaction policies - features that help alleviate investor concerns about fraud and market manipulation.
The study also quantified the influence of institutional investment. When large firms and financial institutions invest in Bitcoin ETPs, it sends a powerful signal of legitimacy that boosts individual confidence.
“For example, if big companies such as Nvidia, Amazon, or Tesla invest, it signals to people that this is real and credible,” said Esmaeil Zadeh. “Institutional backing bridges the trust gap for everyday investors.”
As digital assets evolve, Esmaeil Zadeh believes regulated products like Bitcoin ETPs will play a crucial role in mainstream adoption, especially for investors looking for innovation and safety.
“Some potential investors aren’t afraid of crypto,” Esmaeil Zadeh said. “They’re afraid of not knowing the rules. When you combine regulation, education and legitimacy, that’s when adoption happens.”