A survey by Europe’s largest regulated digital asset hedge fund manager can give us important insights into the current state of the market. Institutional investors have had a substantial influx into cryptocurrencies, but something is holding them back for more. What about volatility? No, here are the details of the report.
According to the survey, what keeps institutional investors from investing in crypto and digital assets is security concerns rather than volatility and regulation. A survey of institutional investors and asset managers, who collectively managed about $108.4 billion, showed that 79% viewed holdings as a key consideration on whether or not to invest in the space. Custodians provide solutions for investors who want to securely store and protect their crypto assets.
The report was produced by Nickel Digital Asset Management and included interviews with 50 asset managers and 50 institutional investors from the US, UK, Germany, France and UAE.
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Why Don’t They Invest?
Since it is a very comprehensive study, its results give us important messages. Let’s examine why institutional investors stay away from cryptocurrencies in the percentage distribution.
12% of corporate executives point to the carbon footprint of cryptocurrencies, especially Bitcoin. States were limited to certain carbon emissions and also imposed certain restrictions on companies. While corporate companies are trying to reduce their carbon footprints, they do not want to negatively affect their efforts with Bitcoin.
49% of respondents say that concern over regulatory uncertainty is keeping them from investing in cryptocurrencies.
A substantial amount of institutional, on the other hand, indicates price volatility.
Survey respondents are also optimistic that the U.S. Securities and Exchange Commission is likely to have greater powers to regulate these assets. SEC chairman Gary Gensler has called on Congress to give the agency more powers to oversee cryptocurrency trading, lending and platforms. 76% of those interviewed expect it to be awarded next year.
The report also includes the following details.
“If the SEC is given these extra powers, 73% of institutional investors and asset managers believe it will have a positive impact on the price of crypto and digital assets, and 32% believe it will have a very positive impact.”
In other words, it does not seem reasonable for now to expect institutional investors to flock to the ecosystem before regulatory clarity comes.