More Investment Firms Are Dipping Their Toes Into Crypto Assets: Survey

Cryptocurrency-related investments are gaining acceptance among Canadian institutional investors, but companies are showing restraint in how much they allocate to these assets, a new study finds.

Fifty-seven percent of institutional investors surveyed said they had exposure to crypto-related assets between 2020 and 2021, according to the survey. The survey was conducted by KPMG and the Canadian Association for Alternative Strategies and Assets and collected responses from 75 companies.

It also revealed that the majority of companies are very cautious with their crypto exposure – 71% said they have allocated less than 2% of their portfolio to the asset class.

“While this is a newer and potentially promising space for institutional investors, they are clearly taking a cautious approach,” Chris Farkas, a partner at KPMG in Canada, said in a statement released Wednesday.

As for how these companies gained exposure, most gravitated to regulated products such as exchange-traded funds (ETFs), according to the data.

Of the 32% of institutional investors who said they directly or indirectly owned crypto assets, half said they owned crypto-related ETFs, while 36% owned crypto-related stocks and 29% owned crypto-related stocks directly. digital parts.

“Institutional investors are increasingly adding exposure to crypto assets to further diversify their portfolios given the reduced ability of government bonds to act as portfolio buffers,” Farkas said.

Similarly, financial services companies have also beefed up their crypto offerings.

Nearly (42%) of financial services firms now offer wealth management services or financial advice for cryptocurrency assets, 33% offer clearing and settlement services, and 22% offer investment vehicles such as ETFs.

Crypto assets have arguably made their way into the mainstream investing world in recent years as more companies launch funds related to the crypto sector.

Toronto-based Purpose Investments launched the world’s first Bitcoin ETF in February 2021, and other companies such as CI Financial, Fidelity Investments and Evolve have rolled out a list of crypto-themed ETFs and mutual funds. cryptography over the past two years.

Investment platforms such as Wealthsimple have also entered the crypto world, bringing digital coin trading to its base of young retail investors.

“While institutional investors have told us they are interested in the crypto space because they see it as an innovative technology game with great potential, financial services companies are also interested in crypto assets, but they are a bit more cautious due to the lack of regulatory clarity in Canada,” said Kareem Sadek, Partner and Leader of Crypto Assets and Blockchain at KPMG in Canada, in the same statement.

“Even with this regulatory uncertainty, nearly four out of 10 financial services companies we hear about offer crypto asset services, so we believe this will be a pivotal year for financial institution adoption of crypto. “