KPMG report: Canadian institutional interest in crypto assets surges

A survey by KPMG in Canada showed a 75% surge in the number of investors holding crypto assets, a significant increase from 29% two years ago.

KPMG’s latest survey results show that Canadian institutional investors significantly increased their investment exposure to cryptocurrencies over the past year compared to previous bull cycles. This trend reflects the growing interest of institutional investors in the cryptocurrency space and their increased acceptance of this emerging asset class.

The consulting group’s biannual “Institutional Adoption of Crypto Assets” survey collected 65 responses. Participating in the survey were 31 institutional investors with assets under management of more than US$500 million and 34 financial service institutions. The survey demonstrates Canadian institutional investors’ attitudes towards and participation in cryptocurrencies, and also reflects the latest trends in the financial services industry in providing crypto-asset-related services.

Institutional interest in crypto assets surges in 2023

KPMG revealed in a report released on April 24 that 39% of institutional investors reported direct or indirect exposure to cryptoassets in 2023, an increase from 31% in the company’s 2021 research.

According to KPMG’s biannual survey report “Institutional Adoption of Crypto-Assets”, in 2023, half of respondents in the financial services industry indicated that they have launched services related to crypto-assets. This figure That’s up from 41% in 2021. This shows that the financial services industry’s participation in the cryptocurrency field is gradually increasing, which not only reflects the growing market demand for crypto-asset services, but also shows the gradual adaptation and acceptance of this emerging asset class by financial services institutions.

Additionally, the survey found that approximately one-third of institutional investors will allocate 10% or more of their portfolios to cryptoassets in 2023. Compared with two years ago, when only one in five investors did so, this change indicates a significant increase in institutional investors' acceptance and willingness to invest in crypto assets. This growth may be related to the maturity of the cryptocurrency market, the improvement of the regulatory environment, and the need to hedge against inflation and currency devaluation. These findings shed light on the growing interest in crypto-assets among Canadian institutional investors and their increasing focus on this emerging investment sector.

Kunal, partner and leader of KPMG’s Canadian digital assets practice Bhasin observed that companies are actively exploring investments in alternative asset classes, primarily to hedge against currency devaluation and find reliable stores of value. He specifically pointed out that this kind of exploration is particularly important in the context of rising inflation and rising debt levels in the United States. Bhasin’s sentiment reflects a broader trend in which institutional investors are looking to diversify their investments to protect and grow the value of their assets amid increased global economic uncertainty. Due to their decentralized nature and potentially high rates of return, cryptoassets are viewed as possible hedging tools and stores of value, thus attracting the attention and investment of more and more institutional investors.

The survey also identified several reasons for institutional investor interest in cryptoassets, including increased market sophistication and improved custody facilities. Financial institutions say rising customer demand for crypto-asset services is an important factor driving their expansion into this new area.

The Rise of Canada as a Crypto Hub

Last year, many cryptocurrency companies chose to relocate their business focus to Canada in the face of strict regulatory crackdowns in the United States. It is particularly worth mentioning that Coinbase has expanded its business to the west coast of Canada and expressed its appreciation for the country's "participatory regulatory" approach, which is more relaxed than the United States. It is not simply strict enforcement, but Lead the industry through engagement and communication.

Canada’s approval of spot Bitcoin and Ethereum exchange-traded funds (ETFs) in February 2021 played a role in attracting local investors to the crypto asset class, according to Kareem Sadek, another executive in KPMG’s digital assets practice. important role.

However, Sadek singled out the recent approval of a spot Bitcoin exchange-traded fund (ETF) in the United States as an important “milestone” for many market participants in Canada. He believes that this development, combined with the significant increase in crypto asset prices, is the main reason for the increasing interest of institutional investors in the cryptocurrency space.

The report also revealed that half of the institutional investors who participated in the survey had exposure to crypto assets through exchange-traded funds (ETFs), closed-end trusts or other regulated financial products in Canada. In addition, 58% of investors have participated in crypto asset investments through the stock market, such as investing in companies such as Galaxy Digital listed on the Toronto Stock Exchange (TSX). This proportion has increased from 36% in 2021, reflecting the increasing interest and participation of institutional investors in crypto assets.

Кроме того, в отчете показано, что число институциональных инвесторов, инвестирующих через рынок деривативов, растет: в настоящее время на рынке деривативов участвуют 42% институциональных инвесторов по сравнению с 14% в 2021 году. Это демонстрирует растущий интерес институциональных инвесторов к использованию производных инструментов для получения доступа к криптоактивам.

Однако участие венчурных и хедж-фондовых компаний в этой области сократилось: их участие снизилось до 25% с 29% в 2021 году. Это может отражать различную ориентацию различных типов инвестиционных институтов на стратегии инвестирования в криптоактивы и изменения в динамике рынка.

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