According to a new survey, the majority of institutional investors plan to gain their first exposure to digital assets within the next year.
According to data shared with City A.M. by digital asset manager Nickel Digital, more than six in ten institutional investors and wealth managers from the United States, the United Kingdom, France, Germany, and the United Arab Emirates expect to test the crypto waters within a year.
“Long-term capital growth prospects” was the most common reason given for wanting to invest in crypto, with 47 percent of respondents agreeing.
44% said they were more confident in the sector now that other major corporations and hedge fund managers have invested in it. A better regulatory environment was cited by 41% as a positive factor.
More than a third of those polled said they planned to invest in cryptocurrency as an inflation hedge.
Investors may be opening up to the nascent asset class for a variety of reasons, according to Henry Howell, head of business development at Nickel Digital.
“This is due to a number of factors, including strong market performance during the Covid crisis, more established investors and corporations endorsing the market, and improvements in the sector’s infrastructure and regulatory framework.”
Earlier this month, Raoul Pal, the current CEO of Real Vision Group and a former Goldman Sachs executive, stated that institutions are “all over” crypto, but are still figuring out how to participate while adhering to regulations, accounting practices, and other hurdles within corporate infrastructure.
“All it takes is time. There are a lot of people to appease and a lot of people to get across the line. It’s how you account for it in GAAP accounting for corporations. The main issue is that you can only mark it down, not up, and it has a high level of volatility in your quarterly earnings.
That is why businesses are slow. They want to do it, and I’ve talked to a lot of them about it, but they say things like, “These accounting rules, we don’t know what to do.”