39% Of Canadian Institutional Investors Dive In

Canadian institutional investors will significantly increase their investments in crypto assets in 2023, with 39% of respondents disclosing direct or indirect involvement in crypto assets. This represents a notable increase from the 31% reported in 2021. Additionally, one-third of these investors allocate more than 10% of their portfolio to crypto assets, indicating growing confidence in the sector.

Findings from a comprehensive study Implemented by KPMG Canada and the Canadian Alternative Asset Strategies Association (CAASA). The survey targeted both financial services organizations and institutional investors operating within Canada. The results showed a significant overall increase in engagement with crypto assets.

Financial services institutions have significantly expanded their crypto-related services. Half of respondents said their organization actively offers at least one type of digital asset service to their customers, a notable increase from 41% in 2021. The most common services include trading, custody, clearing, payment services, and quantitative trading.

Increased desire for virtual currencies among institutional investors

Meanwhile, institutional investors are increasingly interested in digital assets, with 39% reporting exposure to digital assets in 2023, up from 31% a year ago. Notably, 75% of these investors held crypto assets directly, while others accessed the market through various regulated products such as exchange-traded funds (ETFs) and derivatives. That’s true.

Kunal Bhasin, partner and co-leader of KPMG’s digital assets practice in Canada, emphasized the industry’s resilience despite recent disruptions. He attributed the rise in cryptocurrencies in 2023 to factors such as rising U.S. debt and rising inflation, and positioned crypto assets as an alternative investment option and store of value for institutional investors.

Kareem Sadek, Emerging Technology Risk Leader at KPMG, highlighted Canada’s role in fostering a regulatory environment conducive to digital asset innovation. He noted that regulatory approvals and other supportive measures for Bitcoin and Ethereum ETFs have boosted investor confidence in the sector.

The study also revealed a growing trend towards diversification in digital asset investments. Institutional investors have adopted a variety of strategies to gain exposure, including direct ownership, investments in regulated products, and participation in venture capital and hedge funds specializing in digital assets.

Industry experts predict further institutional adoption of crypto assets by Canadian businesses. They recommend education as a top priority. Next comes strategic planning and finally due diligence when entering this new market.

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