Canadian Institutional Investors Amplify Crypto Engagement, Reports KPMG Survey
Summary:
A KPMG survey reveals that Canadian institutional investors significantly increased their cryptocurrency investments in 2023, with around 40% having direct or indirect exposure to crypto assets. This trend was driven by factors such as inflation and debt increase in the US, consumers' growing demand for cryptocurrency services, and improved custodial infrastructure. The approval of Bitcoin and Ethereum ETFs in 2021 played a pivotal role in attracting local investors. Additionally, more than half of the surveyed investors have crypto exposure through Canadian ETFs or the stock market.
A recent poll by audit firm KPMG has revealed that last year, institutional investors in Canada significantly upped their stakes in the crypto domain more than they did during the previous boom. A near 40% of these establishments disclosed direct or indirect connections to digital assets in 2023, a surge from the 31% recorded in the 2021 research by KPMG, as reported on April 24. Out of the 65 responses obtained by KPMG, 31 designated themselves as institutional investors, the majority managing assets exceeding $500 million, while the rest identified as financial service providers. The study indicated that a third of the institutional investors dedicated a minimum of 10% of their portfolios to digital currencies, a rise from one-fifth two years before.
Kunal Bhasin from KPMG Canada’s Digital Assets division stated that the firms seem to be leaning towards alternate asset types that could act as a safeguard against debasement and a dependable value reservoir during periods of escalating inflation and debt increase in the USA. The bulk of investors pointed to a growing market and enhanced custodial infrastructure as the primary drivers for their digital currency investments. Simultaneously, growing consumer demand for cryptocurrency services was identified as a crucial instigator for financial companies broadening their services.
Kareem Sadek, an executive at KPMG’s Digital Assets practice, stated that the first-ever approval of spot Bitcoin and Ethereum ETFs in the world by Canada in February 2021 urged local investors towards the asset type. However, the recent green light for spot Bitcoin ETFs in the US was dubbed a “landmark event” for many Canadian market players, according to Sadek.
The report showed that half of the polled institutional investors had crypto exposure through Canadian ETFs, closed-ended trusts or other regulated entities and 58% through the stock market - such as Galaxy Digital on the TSX, a step up from 36% in 2021. More institutional investors are also gaining exposure via derivatives markets - 42% now versus 14% in 2021. In contrast, the only decrease was noted amongst venture capitals or hedge funds, dropping to 25% from 29% in 2021.
Published At
4/25/2024 4:23:29 AM
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