A new survey has found around 90 per cent of institutional investors believe pension funds, insurers, family offices and sovereign wealth funds will increase their level of investment in cryptocurrencies during the next five years.
The findings from cryptoasset insurer Evertas has revealed 26 per cent of institutional investors believe the industry will “dramatically” raise their level of investment, while a further 64 per cent anticipate a slight rise.
The survey has quizzed a number of investors who manage US$74.8 billion ($103.6 billion) of assets collectively.
When asked why they believe investors will raise their exposure to cryptocurrencies and cryptoassets, 84 per cent of respondents said it was because they expect the regulatory infrastructure for the market to improve.
The majority (80 per cent) also said it was because the crypto market will become larger, providing greater liquidity.
Three in four (76 per cent) stated they expect more mainstream fund managers and financial services companies to enter the market, with more funds and investment vehicles to choose from.
Around half (46 per cent) cited negative interest rates and negative yields on bonds.
However, Evertas found that institutional investors still have substantial qualms about buying into the crypto market.
Some 56 per cent of participants said they are “very concerned” about the lack of insurance cover for cryptoassets, while 54 per cent said they were “very concerned” about the working practices and compliance procedures of companies in the sector who supply services to investors.
Other worries included the quality of custodial services in the market, the availability and quality of trading desks and reporting facilities.
J Gdanski, chief executive and founder of Evertas said the research shows investors are enthusiastic about raising their exposure to the segment, but there are still “clearly many issues regarding the infrastructure that supports these markets”.
“These clearly need to be addressed if the full potential of investment from institutional investors in cryptoassets is to be realised,” Mr Gdanski said.
Evertas president and chief operating officer Raymond Zenkich added the primary concerns around a lack of insurance is perhaps not surprising, “when insurers are only providing capacity of around US$2 billion for a market that is worth between US$250 billion and US$300 billion”.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].