Institutional investors expect cryptocurrency to become more prevalent in institutional portfolios and expect traditional financial institutions to dramatically increase their launches of digital asset funds in the near future.
According to London-based Nickel Digital Asset Management Ltd., which partnered with research firm Pureprofile to interview 200 institutional investors and wealth managers for the project, 75% of respondents said they expect cryptocurrencies to become a part of institutional portfolio asset allocation within the next five years.
Cryptocurrency ETFs are often used by institutional asset owners that seek exposure to the digital asset class. These offerings are dominated by three firms, according to research from ISS Market Intelligence, which, like CIO, is owned by ISS STOXX.
BlackRock, Fidelity Investments and Grayscale Investments manage more than 85% of all crypto ETF assets under management, totaling approximately $123 billion, ISS MI reported. Fidelity offers exposure to bitcoin and ether through its Fidelity Wise Origin Bitcoin Fund and its Fidelity Ethereum Fund, and Grayscale offers exposure through four different funds.
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BlackRock’s iShares Bitcoin Trust and iShares Ethereum Trust account for $70 billion in assets, about half of crypto ETF AUM.
The Nickel Digital survey also found that 66% of respondents said they see cryptocurrency as the asset class with the biggest opportunity to generate attractive risk-adjusted returns over the next five years, followed by private equity and emerging market equities at 64% and 61%, respectively. These investors expect more “traditional financial institutions” to launch crypto funds over the next two years, with 43% saying there will be a dramatic increase and 53% anticipating a slight increase.
“Traditional finance firms are already making significant strides into the digital assets space and that is only predicted to increase over the next two years,” said Anatoly Crachilov, CEO and founding partner in Nickel Digital, in a statement. “The views of institutional investors and wealth managers on the ability of crypto to deliver attractive risk-adjusted returns helps to explain why that is the case, and why professional investors increasingly expect crypto to be part of institutional investors portfolio allocation.”
The Trump administration includes a slate of regulators who are proponents of digital assets, including Jonathan Gould, an attorney who was confirmed by the Senate Thursday to lead the Office of the Comptroller of the Currency. After serving the first Trump administration, he was chief legal officer at Bitfury Group, a provider of crypto mining equipment and related services.
Additional belief that interest in digital assets also follows the Senate’s passage of the landmark GENIUS Act, setting the stage for the enactment of the first federal framework for stablecoins. The House is scheduled to vote on the measure next week.
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Tags: Bitcoin, BlackRock, Cryptocurrency, Digital Assets, ETFs, etherium, Fidelity Investments, Grayscale Investments, ISS Market Intelligence
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