Canadian institutional investors significantly increased their exposure to cryptocurrencies last year compared to the previous bull market cycle, according to a recent study by accounting firm KPMG.
The consulting group's bi-annual survey, “Institutional Adoption of Cryptoassets,” received 65 responses, including 31 institutional investors and 34 financial services organizations that manage more than $500 million in assets. .
Institutional interest in crypto assets will skyrocket in 2023
KPMG said in a report released on April 24 that 39% of institutional investors reported having direct or indirect exposure to crypto assets in 2023, up from 31% in the firm's 2021 survey. revealed that he had done so.
Half of financial services respondents said they will offer crypto asset services in 2023, up from 41% in 2021. Additionally, the survey found that one-third of institutional investors allocate more than 10% of their portfolio to crypto assets, an increase. From the fifth report reported two years ago.
Kunal Bhasin, Partner and Leader of KPMG Canada's Digital Assets Practice He noted that the company appears to be exploring investments in alternative asset classes. America.
The study identified several reasons driving institutional investors' interest in crypto assets, including market maturation and improvements in custodial infrastructure. Financial companies cite increasing customer demand for crypto asset services as a key factor driving expansion into this space.
Canada emerges as a crypto hub
Last year, many crypto companies moved large portions of their operations to Canada following a severe regulatory crackdown in the United States. In particular, Coinbase has expanded its presence on Canada's west coast, praising the country's “regulation by engagement” approach rather than strict enforcement measures.
Canada's approval of Spot Bitcoin and Ethereum exchange-traded funds (ETFs) in February 2021 is attracting local investors to the crypto asset class, according to Kareem Sadek, another executive in KPMG's digital assets division. It is said that he played a major role in this.
However, Sadek emphasized that the recent approval of a spot Bitcoin ETF in the United States is a “milestone moment” for many market participants in Canada. He suggested that this development and the rise in crypto asset prices are contributing to the increasing attractiveness of the crypto space to institutional investors.
The report found that half of the institutional investors surveyed have exposure to crypto assets through Canadian ETFs, closed-end trusts and other regulated products. Additionally, 58% have exposure through stock markets, including the Toronto Stock Exchange's Galaxy Digital, up from 36% in 2021.
Additionally, more institutional investors are gaining exposure through derivatives markets, currently at 42% (14% in 2021). The only decline observed was in venture capital or hedge fund companies, which fell from 29% in 2021 to 25%.
