Canadian Institutional Investors Increase Exposure to Cryptocurrencies in 2023
A recent survey conducted by KPMG reveals that Canadian institutional investors have significantly increased their exposure to cryptocurrencies in 2023. The report indicates that approximately 40% of investors claim to have had exposure to crypto assets, marking an increase from the previous yearโs figure of 31%.
Overview of the Survey
KPMG received a total of 65 responses from various participants, including hedge funds, families, venture capital firms, and private equity. Notably, 31 of the respondents managed assets worth over $500 million. The survey findings indicate that investors are now allocating around 10% of their portfolios to crypto assets, reflecting a global trend of changing perceptions towards cryptocurrencies.
Rationale Behind the Increased Interest
Kunal Bhasin, a representative from KPMG, explained that the rally in cryptocurrencies during 2023 was likely driven by rising U.S. debt and increasing inflation. These factors have led investors to seek alternative asset classes that can act as a hedge against debasement and provide a reliable store of value. The survey findings suggest that crypto assets are increasingly viewed as investable alternative asset classes among institutional investors and financial services organizations in Canada.
Furthermore, the report highlights an increase in the adoption of crypto derivatives. In 2023, approximately 42% of institutions reported being exposed to these financial instruments, compared to just 14% in 2021. This growing interest in cryptocurrencies has positioned Canada as one of the emerging hubs for crypto activities.
Regulatory Developments
Canadaโs regulatory environment has played a crucial role in attracting crypto companies and investors. Amidst hostilities in the United States, many businesses have relocated their operations to Canada. Kareem Sadek, co-leader of KPMGโs Digital Assets practice, emphasized that Canada has created a regulatory framework that supports innovation in crypto assets. This, coupled with the rising prices of cryptocurrencies, has contributed to the increased attraction of institutional investors towards the crypto space.
Hot Take: Canadian Institutional Investors Embrace Cryptocurrencies
The survey conducted by KPMG indicates that Canadian institutional investors have embraced cryptocurrencies, with a significant increase in their exposure to these digital assets. The findings reflect a global trend of changing perceptions towards cryptocurrencies as alternative investment opportunities. Factors such as rising U.S. debt and increasing inflation have likely contributed to this shift in investor sentiment.
As the adoption of crypto derivatives also rises, institutions are diversifying their portfolios to include these financial instruments. This demonstrates the growing acceptance and recognition of cryptocurrencies as viable investment options among institutional investors in Canada.
Canadaโs supportive regulatory environment has further fueled the growth of the crypto industry in the country. With businesses relocating their operations to Canada, it has emerged as one of the key players in fostering innovation and development in the crypto space.
It is important to note that investing in cryptocurrencies carries inherent risks. Investors should exercise caution and conduct thorough research before making any investment decisions. The information provided here is for educational and informational purposes only and should not be considered as financial advice.
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