A recent survey conducted by KPMG in Canada and CAASA revealed that nearly 4 in 10 Canadian institutional investors reported having exposure to crypto assets in 2023, marking a significant recovery from the market slump in 2022. Kunal Bhasin, partner at KPMG in Canada’s Digital Assets practice, noted that despite a turbulent year for crypto in 2022 due to firm collapses and increased fraud, these events had a “cleansing effect” on the industry. The survey findings indicated that crypto assets are increasingly being viewed as an investible alternative asset class by institutional investors and financial services organizations in Canada. Moreover, the number of institutional investors holding cryptocurrencies directly saw a sharp increase last year, jumping from 29% in 2021 to 75% in 2023.
Interestingly, the survey also highlighted that institutional investors’ exposure to crypto assets through exchange-traded funds (ETFs) remained unchanged, likely due to the approval of US spot Bitcoin ETFs earlier in the year. Approximately 50% of investors have had exposure to crypto through ETFs and other regulated products since 2021. Additionally, there was a notable uptick in Canadian institutional investors accessing crypto holdings via public equities and derivatives. A pivotal moment for cryptoassets in Canada occurred in January 2024 when the US Securities and Exchange Commission approved spot Bitcoin ETFs, paving the way for further adoption and integration into the traditional financial system.
Mark Greenberg, Managing Director for Canada at Kraken, highlighted in an interview with Nasdaq that crypto adoption in Canada has been on the rise and garnering mainstream interest among Canadians. Greenberg expressed optimism about the continued growth of crypto adoption in Canada, particularly due to the high proportion of individuals underserved by the traditional financial system. Globally, analyst Mathew McDermott of Goldman Sachs predicted a significant increase in institutional interest in the crypto market in 2023. McDermott believes that this increased interest will lead to a broadening and deepening of liquidity in the market, attracting institutional investors like pension funds and insurance companies who may have been hesitant to engage with crypto-assets in the past.
Overall, the survey results indicate a growing acceptance and integration of crypto assets among institutional investors in Canada. The increased exposure to cryptocurrencies, both directly and indirectly through various financial products, demonstrates a shifting attitude towards these digital assets. With the approval of spot Bitcoin ETFs in the US and the continued mainstream interest in cryptocurrencies, the future looks promising for crypto adoption in Canada. As more institutional investors delve into the crypto market, it is likely to further enhance liquidity and attract a broader range of traditional investors to explore this emerging asset class.
