A recent survey conducted by accounting firm KPMG has revealed that institutional investors based in Canada significantly increased their exposure to cryptocurrencies last year compared to the previous bull run. According to the survey, nearly 40% of institutional investors reported having direct or indirect exposure to crypto assets in 2023, up from 31% in KPMG’s 2021 study.
KPMG received 65 responses for the survey, with 31 of them coming from institutional investors managing over $500 million in assets, and the remaining 34 responses coming from financial services organizations. The survey found that one-third of the institutional investors have allocated 10% or more of their portfolios to crypto assets, which is an increase from a fifth two years ago.
Kunal Bhasin, a partner and leader at KPMG Canada’s Digital Assets practice, stated that it “appears” that firms are looking to invest in alternative asset classes that can serve as a hedge against debasement and as a reliable store of value in the face of increasing inflation and rising debt in the United States. The survey also revealed that a majority of investors cited a maturing market and improved custody infrastructure as key reasons for investing in crypto assets, while financial firms expanded their offerings due to increased client demand for crypto asset services.
The approval of spot Bitcoin and Ethereum exchange-traded funds (ETFs) in Canada in February 2021 played a significant role in attracting local investors to the asset class, according to Kareem Sadek, another executive at KPMG’s Digital Assets practice. Sadek also noted that the recent approval of spot Bitcoin ETFs in the United States was a “milestone moment” for many market participants in Canada.
The report further found that half of the institutional investors surveyed have crypto asset exposure through Canadian ETFs, close-ended trusts, or other regulated products, while 58% have exposure through the stock market, such as Galaxy Digital on the Toronto Stock Exchange. Additionally, more institutional investors are receiving exposure through derivatives markets, which has increased to 42% compared to 14% in 2021. The only decline in exposure came from venture capital or hedge fund firms, which fell to 25% from 29% in 2021.