Institutional investors are finding it harder and harder to ignore how cryptocurrency is changing the financial landscape, as revealed by a recent survey conducted by Fidelity Investments.
The survey’s results indicate that 22 percent of institutional investors have already experienced some degree of exposure to digital assets, with most crypto investments being made in the last three years.
Forty percent of survey respondents have also indicated an interest in investing in digital assets within the next five years.
Interest in crypto is maturing
The survey polled respondents from more than 400 U.S. institutional investors ranging from pensions, family offices, and crypto and traditional hedge funds to financial advisors and endowments and foundations.
“We’ve seen a maturation of interest in digital assets from early adopters, like crypto hedge funds, to traditional institutional investors like family offices and endowments,” said Fidelity Digital Assets president Tom Jessop.
“More institutional investors are engaging with digital assets, either directly or through service providers, as the potential impact of blockchain technology on financial markets – new and old – becomes more readily apparent.”
Opinions split on how to hold crypto
The survey also found that 47 percent believe that digital assets have a place in their investment portfolios. Opinions on how these investors should hold digital assets in the future vary, however.
A large number, 72 percent, prefer to buy investment products that already hold digital assets. Fifty-seven percent prefer to buy their crypto directly, and another 57 percent want to buy investment products that hold digital asset firms instead.
On a more granular note, financial advisors and family offices reportedly view the appealing characteristics of digital assets, such as its position as an innovative tech play and its low correlation to other assets, most favorably.
Major concerns remain
Some major concerns do still exist, however. The price volatility of crypto assets, issues about the lack of regulatory clarity, and digital assets’ limited track record and lack of fundamentals were among the biggest obstacles identified by the survey.
Jessop acknowledged these concerns, but Jessop echoed optimistic sentiments expressed by Fidelity Digital Assets blockchain architect Bob McElrath during the recent DTCC Fintech Symposium.
“[Price] volatility, which was a primary concern of survey respondents, may dampen as the underlying custody, trading and financing infrastructure continues to develop in a direction that traditional market participants are familiar with,” Jessop said.