Crypto asset security main obstacle ahead of institutional adoption

Table of Contents

• Opinion

A recent survey of institutional investors and wealth managers showed that 79% of them believed that crypto asset custody was their main consideration.

Europe’s largest regulated digital-asset hedge fund manager made the survey, and according to an article on Bloomberg today, the report was commissioned by Nickel Digital Asset Management. 50 wealth managers and 50 institutional investors from diverse regions of the globe such as the UK, US, United Arab Emirates, Germany and France, were given interviews.

The results were that 79% of them saw asset security as the largest consideration before deciding to invest in crypto assets. 67% of them were concerned about price volatility, while 56% looked at market cap.

49% were worried about the regulatory environment, while just 12% put in their top 3 reasons for not investing in Bitcoin and other cryptocurrencies, that they were put off by the crypto sector’s carbon footprint.

A large percentage of those interviewed were hopeful of the SEC being able to intervene in the space with stronger regulation. They wanted to see the SEC be granted more resources with which to oversee and regulate the trading and lending of digital assets. 76% thought that the additional resources would be granted to the SEC in 2022.

According to the report:

“If the SEC is granted these extra powers, 73% of institutional investors and wealth managers believe this will have a positive impact on the price of crypto and digital assets and 32% believe it will have a very positive effect,”

Opinion

It might be said that the thinking of the wealth managers and institutions does rather run against the tide of thinking within the crypto sector itself. What the SEC, through its chairman Gary Gensler, has said so far, has not been at all encouraging for a continuation of such innovative financial products coming out of crypto.

It is hoped that beneath the rather heavy handed approach of the SEC so far, there will be some intelligent thought behind the regulations that are put in place. Regulation that is designed to stunt and stifle the space in favour of the existing financial system, and at the expense of the ordinary investor, will not be welcomed.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.