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More financial institutions offering cryptocurrency services, survey finds – National
Cryptocurrency investing is gaining momentum, even in the face of potential volatility and massive fraud that has been uncovered, according to a new survey.
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According to the survey carried out by KPMGwhich was released Wednesday, 22% more financial services organizations offered “cryptoasset products and services” to their clients in 2023 compared to 2021, while 26% more institutional investors included cryptoassets in their portfolio during the same period.
Half of financial services respondents said their organizations actively offer at least one type of cryptoasset product or service to clients, up from 41% in 2021, and 39% of institutional investors said they have direct or indirect exposure to cryptoassets, up from 31% in 2021.
Among institutional investors, 75% reported owning cryptoassets directly, up from 29% in 2021.
The survey collected responses from 65 entities, of which 31 were institutional investors, such as hedge funds, pension funds, high net worth individuals and venture capital firms, while 34 were financial services organizations.
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According to the survey, financial services organizations have increased their cryptocurrency offerings and offered an average of two to three services in 2023, up from one to two services in 2021. Eighty percent of them said customer demand for crypto-asset services was a major factor in the expansion of offerings.
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Kunal Bhasin, a partner at KPMG who specializes in crypto assets, told Global News that the growing demand for cryptocurrencies is coming primarily from institutional investors who are looking to invest in the sector for the long term rather than making a quick buck. He said that from what he’s seen, it’s clients who are asking to get involved in cryptocurrencies.
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This could be due to the rising value of cryptocurrencies such as Bitcoin, whose price has seen significant volatility but is also expected to increase by 150% in 2023 and 50% so far in 2024, according to KPMG.
According to the survey, 67% of investors said the maturity of the cryptocurrency market and the security measures in place for digital assets were the main reasons they first invested in crypto assets, and 58% said their involvement was due to the strong performance of the market.
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The growing involvement in cryptocurrencies comes after the industry was rocked by major frauds, including that of Sam Bankman-Fried’s crypto trading platform FTX. Bankman-Fried was convicted of stealing more than $8 billion from clients and was sentenced to 25 years in prison in March.
Bhasin said the industry has emerged stronger from the scandal and new risk management frameworks and strategies have been put in place to handle the product.
He said big institutions had stepped back after the fraud was discovered, but were now back in the game and their involvement had given crypto a sense of maturity that had encouraged others to join in as well.
“These events have had a cleansing effect and people are starting to report these kinds of frauds much earlier when they see them,” he said. “Cryptocurrencies are not going to go away.”
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