Four in 10 (39 per cent) Canadian institutional investors say they have either direct or indirect exposure to cryptocurrency, according to a new survey by KPMG in Canada and the Canadian Association of Alternative Assets and Strategies.

The survey, which 31 institutional investors and 34 financial services organizations, found three-quarters (75 per cent) of institutional investors reported owning cryptocurrency assets directly, while half (50 per cent) said they have exposure through exchange-traded funds or close-ended trusts and two-fifths (42 per cent) have exposure through derivatives. More than half (58 per cent) said they hold public equities related to cryptocurrency, while a quarter (25 per cent) said they have exposure as a limited partner through investments in a venture capital or hedge fund.

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Institutional investors cited a maturing market and custody infrastructure (67 per cent) and strong market performance (58 per cent) as the reasons for their first investments in cryptocurrency. Notably, a third of institutional investors said they’ve allocated 10 per cent or more of their portfolios to cryptocurrency assets.

“Rising U.S. debt combined with increasing inflation likely provided a catalyst for the crypto rally of 2023 and it appears investors are looking for alternative asset classes that act as a debasement hedge and a reliable store of value,” said Kunal Bhasin, partner and co-leader of KPMG in Canada’s digital assets practice, in a press release. “Our survey findings suggest [cryptocurrency assets] are increasingly seen as an investible alternative asset class among such institutional investors and financial services organizations in Canada.”

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