Fidelity Says 80% of Investors Want Crypto in Wallets: “Regulation is Coming”
Nearly eight in ten institutional investors say digital assets such as cryptocurrencies should be part of a portfolio, according to a study by the digital assets arm of Fidelity.
Just over half of the institutions surveyed in the United States, Europe and Asia currently hold digital asset allocations, the manager said in his July 20 report.
Over 90% of people interested in cryptocurrencies expect the sector to be a long-term bet, he added, with the intention of including them in portfolios over the next five years. .
Figures from an investigation earlier this year preceded recent crackdowns by regulators on the way digital currencies are advertised as well as the operations of companies like Binance.
Fidelity’s survey of 1,100 institutional investors in the United States, Europe and Asia was conducted between December and April, a period that ended before bitcoin hit its all-time high of 64. $ 829 this month.
The data does not reflect how views may have changed after the major bitcoin price crashed to around $ 30,000 on May 19 – a drop that, two months later, bitcoin and other cryptocurrencies did not have not yet recovered.
LILY Nearly half of young UK investors go crypto for first bets
“As the market rose, the people who had decided they were going to make allowances had an urgency to access the market. Considering the price movement we have seen since, there is much less urgency, ”said Chris Tyrer, European Head of Digital Assets at Fidelity, in an interview with Financial news.
The asset manager continues to have “very positive conversations” with institutions including hedge funds, family offices, endowments and pension funds regarding crypto investing, Tyrer added. Fidelity Digital Assets recently revealed its intention to increase its workforce by 70% to meet demand.
Cryptocurrency adoption rates among institutions were highest in Asia at 71% during the study period, ahead of Europe at 56% or the United States at 33%. This is likely the result of clearer industry regulation in countries like Japan, Tyrer said, as the EU only released a draft proposal on the treatment of cryptoassets only last September.
Tyrer said conversations with Fidelity clients had yet to raise concerns about the ongoing regulatory crackdown on retail crypto participation, such as the series of global warnings against trading digital assets. Binance.
“This is a new emerging asset class. Regulation is coming and what we tend to see is that imposing this regulation is definitely beneficial for adoption levels in the future, ”he added.
Bitcoin remains the most popular cryptocurrency for Fidelity clients, although over time attention has shifted to other emerging assets. About 98% of conversations with customers 12 months ago would have been “exclusively about bitcoin,” Tyrer said, but interest in Ethereum-based tokens is now increasing.
LILY Binance crackdown highlights regulatory crypto conundrum
“Bitcoin is obviously the highest market [capitalisation] cryptoasset that we have and therefore central to learning when people enter space. It’s a natural progression from where people start to look outside, ”he said.
“What we have seen, however, is that much further down the list of market capitalizations there is still limited interest from institutional investors from our perspective.”
Price volatility has been named as the biggest barrier to crypto adoption in research, followed by the lack of fundamentals to assess value and concerns about market manipulation.
Meanwhile, discussions regarding the sector’s high carbon footprint and how it might align with investors’ environmental, social and governance goals are “pretty close,” Tyrer said.
“It is unfortunate that the focus has been exclusively on E within ESG,” he added. Tyrer cited a recent speech by a human rights activist earlier this year, in which bitcoin was described as “an escape route from tyranny”.
“It’s not rhetoric. We have seen cases where bitcoin is being used in certain regions to avoid being monitored, which often happens in traditional currency payment systems, ”he added.
Fidelity expects cryptocurrency price volatility to ease as more institutional investors join us, although more drawdowns on funds already participating in the asset class. are probable.
The asset manager plans to release a breakdown of which cryptocurrencies are gaining attention and by what methods institutional investors are entering the sector later this year.
To contact the author of this story with comments or news, email Emily Nicolle