Institutional investors in Canada are showing a strong appetite for cryptocurrencies, with a new survey revealing a significant surge in adoption rates. The report, conducted by KPMG in Canada and the Canadian Association of Alternative Assets and Strategies (CAASA), paints a picture of a booming crypto market fueled by investor confidence and a supportive regulatory environment.

In 2023, a staggering 39% of surveyed institutional investors reported exposure to crypto assets, a sharp increase from 31% just two years prior. This newfound interest translates into action, with a significant portion of these investors allocating a substantial share of their portfolios to crypto.

The survey found that one-third of participating institutions had placed at least 10% of their assets in crypto, demonstrating a growing belief in the long-term potential of this asset class.

This trend is being met with a corresponding expansion in crypto-related services offered by financial institutions. The survey revealed that half of the participating financial service organizations now offer at least one type of crypto service, up from 41% in 2021.

These services encompass a wide range, including trading platforms, custody solutions for safekeeping crypto assets, and quantitative trading strategies specifically designed for the crypto market.

The survey also highlights a growing trend of diversification within the crypto investment landscape. Investors are no longer putting all their eggs in the Bitcoin basket. While direct ownership of crypto assets remains popular, with 75% of crypto-exposed institutions holding them directly, a growing number are seeking exposure through alternative avenues.

These include regulated investment products like exchange-traded funds (ETFs) and derivatives, which allow investors to participate in the market without directly owning the underlying crypto assets. Additionally, some institutions are gaining exposure through venture capital or hedge funds specializing in the digital asset space.

Experts believe several factors are driving this surge in institutional crypto adoption in Canada. The crypto market rally of 2023, potentially fueled by economic factors like inflation, likely made crypto assets more attractive as alternative investment options and potential stores of value.

Furthermore, Canada’s progressive stance on crypto regulation is seen as a major confidence booster for institutional investors. The recent regulatory approvals for Bitcoin and Ethereum ETFs, alongside other supportive measures, have helped to legitimize the crypto market and mitigate some of the risk concerns previously held by institutional investors.

Looking ahead, industry experts predict continued growth in crypto adoption by Canadian institutions. However, they emphasize the importance of education and careful planning for investors entering this new and volatile market.

Canada’s crypto market appears poised for continued growth, fueled by a combination of strong investor interest, expanding service offerings, and a supportive regulatory environment.

Featured image from Pixabay, chart from TradingView

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