Canada’s institutional investors have shown a burgeoning interest in cryptocurrencies, with 39% reporting direct or indirect exposure to crypto assets, a notable increase from 31% in 2021.
A recent KPMG in Canada and CAASA survey revealed a robust uptake of crypto assets among financial organizations and institutional investors following a year of recovery and regulatory advancements.
Crypto Assets Gain Favor as Hedge Against Dollar Inflation: KPMG
The survey, gathering insights from Canadian financial services and institutional investors, indicates that 50% of financial services respondents offered crypto asset services in 2023, up 9% from the previous year. The recovering crypto market, enhanced regulatory clarity, and innovations in digital assets contribute to the growth.
KPMG’s Digital Assets practice co-leader Kunal Bhasin emphasized that crypto assets are increasingly considered investible alternative assets. He attributes the surge to the rise of US debt and the inflation of the Dollar, which has investors seeking crypto as a hedge and a stable store of value.
“The last time we did this survey in 2021, it was a strong year for cryptoassets. The following year was a turbulent year, marked by fraud and collapses of major cryptoasset trading firms, but those events had a cleansing effect on the industry,” Kunal Bhasin Stated.
Further findings highlight that 75% of institutional investors held crypto assets directly, with 50% gaining exposure via exchange-traded funds or regulated products. Exposure to crypto-related public equities also increased, with 58% of investors venturing into such assets.
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Improved market infrastructure and strong performance metrics drove the significant uptick in crypto investments. Bitcoin, for instance, climbed by 150% in 2023 and continues its ascent in 2024. The SEC’s approval of spot Bitcoin ETFs marked a turning point, attracting traditional asset managers to the crypto industry, with anticipation building for the approval of an Ethereum ETF.
“A pivotal moment for cryptoassets came in January 2024, when the U.S. Securities and Exchange Commission (SEC) approved spot Bitcoin ETFs. That was considered a milestone event for many market participants. That attracted many traditional asset managers with strong reputations to the cryptoasset industry,” says Kareem Sadek, Emerging Technology Risk leader and co-leader of KPMG’s Digital Assets practice.
Hence, as the Canadian market shows a healthy appetite for crypto, experts like Bhasin advise financial institutions and investors keen on increasing their crypto exposure to pursue education in the industry, develop a strategic vision, and implement robust internal policies to navigate this evolving landscape successfully.
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