The majority of institutional investors intend to gain exposure to digital assets for the first time within the next year, according to a new survey.
In data shared with City A.M., digital asset manager Nickel Digital says that more than six in 10 institutional investors and wealth managers from the US, the UK, France, Germany, and the UAE expect to test the crypto waters within a year’s time.
The most common reason given for wanting to invest in crypto was “long-term capital growth prospects,” a sentiment shared by 47% of respondents.
Forty-four percent said they were more confident in the sector now that other leading corporations and hedge fund managers were invested in crypto. Forty-one percent cited an improving regulatory environment as a positive factor.
More than one-third of respondents said they intended to invest in crypto as a hedge against inflation.
Henry Howell, head of business development of Nickel Digital, names a few reasons why investors may be opening up to the nascent asset class.
“This is being driven by several factors including strong market performance during the Covid crisis, more established investors and corporations endorsing the market, and the sector’s infrastructure and regulatory framework improving.”
Earlier this month, former Goldman Sachs executive and current Real Vision Group CEO Raoul Pal said that institutions are “all over” crypto, but still navigating how to participate while also adhering to regulations, accounting practices, and other hurdles within corporate infrastructure.
“It just takes time. There’s a lot of people to get across the line and you need to appease a lot of people. For the corporations, it’s how you account for it in GAAP accounting. The big problem is you can only mark it down, you can’t mark it up, and it has volatility in your quarterly earnings.
That’s why the corporations are slow. They want to do it, I’ve spoken to many but they’re like, ‘These accounting rules, we don’t know what to do.’ ”
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