A KPMG survey found that nearly four in 10 Canadian-based institutional investors had exposure to crypto assets in 2023. This marks a significant recovery from the market slump in 2022.
The KPMG in Canada and CAASA survey highlighted that 39% (or nearly 4 in 10) of Canadian institutions reported direct or indirect exposure to crypto assets in 2023, up from 31% in 2021.
“The last time we did this survey in 2021, it was a strong year for virtual assets,” says Kunal Bhasin, a partner in KPMG’s Canadian Digital Assets practice.
He added that the following year was a tumultuous one, shaken by the collapses of a major crypto company and an increase in fraud. However, he said the events had a “cleansing effect” on the cryptocurrency industry.
“The results of our survey suggest that these assets are increasingly seen as an alternative asset class in which to invest, among institutional investors and financial services organizations in Canada.” What’s more, the survey shows a staggering increase in the number of institutional investors holding cryptocurrencies directly in the past year – 75% compared to 29% in 2021.
Interestingly, their exposure to cryptocurrencies through exchange traded funds remains unchanged, given the approval of U.S. Bitcoin ETFs earlier this year. Consistently from 2021. 50% of investors had exposure to cryptocurrencies through ETFs and other regulated products.
The survey also highlighted a significant increase in the number of Canadian institutional investors accessing cryptocurrency portfolios through public equities and derivatives.
“A key moment for cryptocurrencies came in January 2024, when the U.S. Securities and Exchange Commission (SEC) approved Bitcoin ETFs,” – Kareem Sadek of Digital Assets at KPMG says.
What has the adoption of cryptocurrencies in Canada looked like?
Mark Greenberg, managing director for Canada at Kraken, told Nasdaq in an interview last year that cryptocurrency adoption continues to flourish and is a major interest among Canadians.
“We’re seeing increased adoption across all cohorts of the Canadian market, both among individuals and institutions and across demographics.”
Greenberg was optimistic at the time that cryptocurrency adoption in Canada would increase in the coming years. “I’m optimistic about cryptocurrencies around the world, and even more so in Canada, where we have a high percentage of people who are not adequately taken care of within the existing traditional financial system.”
On the global front, the cryptocurrency market will see a significant increase in institutional interest this year, noted analyst Mathew McDermott of Goldman Sachs.
“This would broaden and deepen liquidity in the market, attracting institutional investors, such as pension funds and insurance companies, who would otherwise be reluctant to get directly involved in cryptocurrencies,” McDermott said earlier this year.
