Nearly 40% of institutional investors based in Canada had exposure to crypto assets in 2023, according to a survey conducted by KPMG. This represents a notable rebound from the market downturn experienced in 2022.
The survey, conducted by KPMG in Canada and CAASA, revealed that 39% of Canadian institutional investors reported having direct or indirect exposure to crypto assets in 2023, up from 31% in 2021.
Kunal Bhasin, a partner at KPMG in Canada’s Digital Assets practice, noted that while 2021 was a strong year for crypto assets, the following year was marked by turbulence, including the collapse of major crypto firms and an increase in fraud. However, Bhasin suggested that these events had a “cleansing effect” on the crypto industry.
The survey findings indicate that crypto assets are increasingly viewed as an investible alternative asset class among institutional investors and financial services organizations in Canada.
The survey also revealed a significant increase in institutional investors holding cryptocurrencies directly, rising from 29% in 2021 to 75% in 2023. Interestingly, exposure to crypto through exchange-traded funds (ETFs) remained unchanged, despite the approval of US spot Bitcoin ETFs earlier in the year. Approximately 50% of investors have had exposure to crypto through ETFs and other regulated products since 2021.
Additionally, there was a notable increase in Canadian institutional investors accessing crypto holdings via public equities and derivatives.
Kareem Sadek, also from KPMG’s Digital Assets practice, highlighted a pivotal moment for crypto assets in January 2024, when the US Securities and Exchange Commission (SEC) approved spot Bitcoin ETFs.
Regarding Canada’s crypto adoption, Mark Greenberg, Managing Director for Canada at Kraken, expressed optimism about the flourishing adoption and mainstream interest among Canadians. He anticipated further growth in crypto adoption in Canada in the coming years.
On a global scale, analyst Mathew McDermott of Goldman Sachs predicted a significant increase in institutional interest in the crypto market in 2024. He suggested that this would enhance liquidity in the market and attract institutional investors such as pension funds and insurance companies who may have been hesitant to engage directly with crypto assets previously.
