According to most institutional investors, the security of virtual assets and custodial services is the biggest barrier to entry into the crypto market.
According to a recent study performed by Nickel Digital Asset Management, almost 75% of institutional investors and wealth managers believe virtual currency security is a major barrier preventing many people from entering the crypto market.
Institutional investors have a low level of confidence.
Nickel Digital Asset Management, a UK-based investment manager, polled 100 worldwide institutional investors and wealth managers to find out what their main worries about cryptocurrency were. Participants in the study were from established nations like the United States, the United Kingdom, the United Arab Emirates, France, and Germany, with a combined AUM of $275 billion.
Concerns regarding the security of custodial services are the key reason preventing investors from getting on the crypto bandwagon, according to the great majority of them (76%).
While many forward-thinking institutional investors are growing their exposure to digital assets, our studies reveal that security and custody of these assets remain a major worry for many other allocators, according to Anatoly Crachilov, co-founder and CEO of Nickel Digital.
A lesser proportion of respondents identified the crypto market‘s regulatory framework as a key barrier, while others highlighted the lack of transparency and the volatile nature of digital currencies as significant roadblocks.
Despite the bad numbers, Crachilov pointed out that several big institutions had lately entered the market, which should result in better security:
“We are now seeing Fidelity, BNY Mellon, and State Street entering the market, thus further reinforcing market infrastructure. All of this increases the confidence levels in the sector and lead to ever-growing allocations to this fast-developing asset class.”
In the last survey, respondents had high hopes for cryptocurrency.
Nickel Digital Asset Management performed a similar study earlier this month, but this time questioned if institutional investors intend to expand their crypto holdings. Again, the respondents came from the same countries as in the previous poll.
According to the findings, 82% of those who have previously invested in digital assets would increase their crypto exposure between now and 2023. When asked whether they plan to expand their holdings dramatically, 40% responded yes.
According to Nickel Digital Asset Management, the major reason participants would invest more in cryptocurrencies is their long-term capital growth potential, which is backed up by 58% of the respondents. But, surprisingly, 37% said they would follow in the footsteps of a large business and contribute capital to the crypto market only if they saw such an example.
Only 1% of respondents said they would liquidate their whole digital asset portfolio, while 7% said they should limit their exposure.