Asset Managers Adopting Crypto Assets: Nearly Half Now Manage Digital Assets
A recent study conducted by digital currency data provider Amberdata and Coalition Greenwich reveals that 48% of institutional investors are now managing digital assets. Despite recent market volatility, growth forecasts for the industry remain strong. Over the next five years, three-fourths of asset managers expect the assets under management (AUM) for digital assets to expand, with over 40% predicting significant growth of 11-20% or more.
The report highlights that asset managers recognize the growing market opportunity in managing digital assets. Around 44% of them anticipate digital assets to become a growing business line in the next three to five years, aiming to outperform overall market growth. Additionally, the study suggests that dedicated digital asset believers are more positive about the current state of adoption.
Various strategies are being employed, including active and passive funds, arbitrage, and venture capital plays. The most popular instruments are exchange-traded products, stablecoins, and cryptocurrencies. Tokenized securities and real-world assets are identified as upcoming offerings.
U.S. Regulation Crucial for Managers
The report emphasizes the importance of the U.S. market, with asset managers betting on constructive crypto regulation within the next five years. The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are viewed as providing positive opportunities in the long run. However, currently, overseas hubs like Dubai and Switzerland are drawing more interest.
The study also highlights that infrastructure, including well-regulated custody, is critical for the ecosystem’s development. It predicts an increase in spending on crypto market data, blockchain analytics, and portfolio systems in the coming months. As the industry matures, asset managers are more likely to seek partnerships and outsourcing rather than building capabilities internally.
Hot Take
The study reveals a significant shift in the asset management industry as nearly half of institutional investors are now managing digital assets. This trend is expected to continue with the majority of managers foreseeing expansion in the assets under management for digital assets. As the industry matures, regulatory clarity and infrastructure development will play crucial roles in attracting more asset managers. The report highlights the rising demand for data, analytics, and tools to support front-office professionals, suggesting that the industry is preparing for further growth. Overall, the study indicates a growing acceptance and adoption of digital assets among asset managers.
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