According to a survey conducted by accounting firm KPMG, institutional investors based in Canada significantly boosted their exposure to crypto assets last year compared to the previous bull run.
Nearly 40% of institutional investors reported having direct or indirect exposure to crypto assets in 2023, up from 31% in KPMG’s 2021 study. The survey received 65 responses, with 31 identifying as institutional investors managing over $500 million in assets, and 34 representing financial services organizations.
One-third of institutional investors have allocated 10% or more of their portfolios to crypto assets, compared to a fifth two years ago. Investors are seeking alternative asset classes to hedge against debasement and store value amidst rising inflation and debt in the United States.
Maturing market and improved custody infrastructure are cited as key reasons for investing in crypto assets. Financial firms are expanding their crypto asset services due to increased client demand.
Canada’s approval of spot Bitcoin and Ethereum exchange-traded funds (ETFs) in February 2021 attracted local investors to the asset class. The recent approval of spot Bitcoin ETFs in the United States was viewed as a milestone moment for many market participants in Canada.
Half of institutional investors have crypto exposure through Canadian ETFs, close-ended trusts, or other regulated products. 58% have exposure through the stock market, such as Galaxy Digital on the Toronto Stock Exchange, up from 36% in 2021.
Derivatives markets have seen increased participation, with 42% of investors now involved, compared to 14% in 2021. Venture capital or hedge fund firms experienced a slight decrease in crypto exposure, falling to 25% from 29% in 2021.
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