Canada Sees Uptick in Institutional Investors Exposed to Crypto

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According to a survey conducted by accounting firm KPMG, institutional investors based in Canada significantly increased their exposure to crypto assets last year compared to the previous bull run.

In 2023, nearly 40% of institutional investors reported having direct or indirect exposure to crypto assets, up from 31% in KPMG’s 2021 study.

Canada and Crypto Adoption

The survey received 65 responses, with 31 identifying as institutional investors managing more than $500 million in assets, and the remaining 34 representing financial services organizations operating in Canada.

One-third of institutional investors have allocated 10% or more of their portfolios to crypto assets, an increase from a fifth two years ago.

Kunal Bhasin, a partner and leader at KPMG Canada’s Digital Assets practice, noted that firms in Canada are increasingly interested in investing in alternative asset classes that serve as a hedge against debasement and a reliable store of value amidst rising inflation and debt in the United States.

Canada is a Maturing Market

The survey revealed that a majority of investors in Canada cited a maturing market and improved custody infrastructure as key reasons for investing in crypto assets. Additionally, increased client demand for crypto asset services was a significant factor in financial firms expanding their offerings.

The approval of spot Bitcoin and Ethereum exchange-traded funds (ETFs) in Canada in February 2021 played a pivotal role in attracting local investors to the asset class. 

Approval of Spot BTC ETF

According to Kareem Sadek, another executive at KPMG’s Digital Assets practice, the recent approval of spot Bitcoin ETFs in the United States was a “milestone moment” for many market participants in Canada.

Half of the institutional investors surveyed have crypto asset exposure through Canadian ETFs, closed-ended trusts, or other regulated products. Furthermore, 58% have exposure through the stock market, such as Galaxy Digital on the Toronto Stock Exchange, which is up from 36% in 2021.

The survey also showed that more institutional investors are gaining exposure through derivatives markets, now at 42% compared to 14% in 2021. However, exposure through venture capital or hedge fund firms fell to 25% from 29% in 2021.

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