Institutional investors to increase allocations to crypto assets says new survey
New research amongst institutional investors who collectively help manage USD78.4 billion of assets, reveals that over the next five years 26 per cent believe pension funds, insurers, family offices and sovereign wealth funds will ‘dramatically’ increase their level of investment in cryptocurrencies such as bitcoin and crypto assets in general.
A further 64 per cent anticipate a slight rise. The corresponding figure for hedge funds is 32 per cent and 48 per cent respectively.
The findings are from crypto asset issuance company Evertas, which focuses on covering institutional holders of cryptoassets including exchanges, custodians, traditional financial institutions, funds, family offices and ultra-high net worth individuals.
When asked why they believe institutional investors will increase their exposure to cryptocurrencies and crypto assets, 84 per cent of the survey respondents said it was because they expect the regulatory infrastructure for the market to improve, and this is followed by 80 per cent who say it is because the crypto market will become much bigger, providing greater liquidity. Three in four (76 per cent) say it is because they expect more mainstream fund managers and financial services companies to enter this market, and there will be more funds and investment vehicles in this area to choose from.
However, Evertas’ findings reveal that institutional investors still have some substantial concerns about investing in crypto assets. Some 56 per cent said they are ‘very concerned’ about the lack of insurance cover for crypto assets, while 54 per cent were ‘very concerned’ about the working practices and compliance procedures of companies working in the sector who supply services to institutional investors. Other concerns include the quality of custodial services in this market, the availability and quality of trading desks, and reporting facilities.
J Gdanski, CEO and Founder of Evertas, says: “Our research shows that institutional investors are enthusiastic about increasing their exposure to cryptocurrencies and crypto assets in general, but there are clearly many issues regarding the infrastructure that supports these markets that still concerns them. These clearly need to be addressed if the full potential of investment from institutional investors in crypto assets is to be realised.”
Raymond Zenkich, President and COO, Evertas, says: “A lack of adequate insurance for the crypto assets market is clearly top of the list of concerns for many institutional investors, which is perhaps not surprising when insurers are only providing capacity of around USD2 billion for a market that is worth between USD250 billion and USD300 million. We are working closely with the insurance community to address this issue.”
Earlier this year, Evertas completed a Seed Stage funding round and raised USD2.8 million. The funding round was led by Morgan Creek, who were joined by Plug n Play, Kailash Ventures, RenGen, Vy Capital and Wavemaker Genesis. Mark Yusko, Founder, CEO and Chief Investment Officer of Morgan Creek Capital Management & Managing Partner of Morgan Creek Digital Assets, joined Evertas’ Board of Directors.
It also received its licence from the Bermuda Monetary Authority to start operating from the jurisdiction. It operates as a ‘Class 3A’ insurer.
Founded in 2017, Evertas has a world-leading team led by an experienced group of executives including , a blockchain team leader at Bank of New York, and a blockchain industry insurance expert. The founders have over 40 years of combined experience in the insurance sector, and more than ten in the crypto and blockchain markets.