- A recent survey found that institutional investors are most concerned about asset custody when it comes to investing in cryptocurrencies.
- Price volatility and the regulatory environment were also major concerns that prevented investors from venturing into the new asset class.
- Respondents were optimistic about cryptocurrency prices if the US SEC is given additional powers to govern cryptocurrencies.
While the digital asset industry witnessed tremendous growth in institutional adoption last year, a recent report highlighted that institutions are still hesitant to venture into cryptocurrencies due to the security risks associated with the industry.
Security remains the top concern for institutional investors
Europe’s largest regulated cryptocurrency hedge fund manager interviewed 50 wealth managers and 50 institutional investors in the United States, United Kingdom, Germany, France and the United Arab Emirates, who collectively manage approximately $ 108.4 thousand million in assets.
The report indicated that 79% of the participants found that custody of cryptocurrencies is the key consideration in deciding whether to invest in the new asset class.
Henry Howell, director of business development at Nickel Digital, said that respondents “have identified custody and security as a key differentiator of this unique asset class.”
67% of respondents cited concerns about price volatility and 56% cited market capitalization as a concern.
About 49% of institutional investors were suspicious of the regulatory environment, while 12% had concerns about the carbon footprint of mining Bitcoin and other cryptocurrencies as their main reasons for not investing in the new asset class.
Additionally, 76% of respondents were optimistic that the chairman of the U.S. Securities and Exchange Commission, Gary Gensler, will be able to get Congress to give the agency more authority to provide more guidance and regulation to the industry. of crypto for next year.
73% of institutional investors surveyed believe that if the SEC is given additional powers to govern cryptocurrencies, it will have a positive impact on digital asset prices, while 32% believe it will have a “very positive effect.”