Institutions are not only oblivious to the crypto bear market, but they are also outright bullish, according to a report crypto data provider Amberdata and financial services analyst Coalition Greenwich. The report assessed sixty asset managers from the U.S., Europe, and the U.K., including hedge funds, venture capital firms, and family offices. The most significant finding was that nearly half (48%) of asset managers currently have digital assets under management, although the figures for digital assets under management vary. While the majority fall in the lower range, with 22% holding between $1-10 million, one institution operates over $1 billion in digital assets.
The surveyed asset managers are also quite large in size, with roughly a third reporting over $5 billion in assets under management (AUM) across all classes. Another third declared $1-5 billion in AUM, and the remaining held under $1 billion in AUM. Despite the lack of a clear regulatory environment, these asset managers are bullish on digital asset adoption in the U.S. A significant majority (85%) of respondents expect positive opportunities from regulators, including the SEC and CFTC. However, concerns remain for institutions not involved in crypto, with regulatory environment being one of the main roadblocks. Other challenges include the lack of a common KYC/AML technology, unclear tax policies, custody complexities, security practices, and blockchain performance issues.
The report also highlights the commitment of institutions to provide specialized crypto services. One in every four surveyed institutions currently have a dedicated role focused on digital assets, with a projected growth of 13% over the next twelve months. This indicates that many institutions are prioritizing crypto products and services moving forward, despite the ongoing bear market. Moreover, the collapse of FTX has not deterred most asset managers, as they still expect centralized exchanges to grow over the next five years.
Source: Amberdata and Coalition Greenwich research report
- Crypto bear market: A bear market is a market condition where prices of an asset are falling or expected to fall, typically accompanied low investor confidence.
- Digital assets under management (AUM): The total value of digital assets (such as cryptocurrencies) that an institution manages.
- Regulatory environment: The rules, regulations, and policies set regulatory bodies that govern the use, trading, and management of digital assets.
- KYC/AML technology: Know Your Customer (KYC) and Anti-Money Laundering (AML) technologies are tools and processes that financial institutions use to verify the identity of customers and prevent money laundering.
- Custody: The safekeeping and storage of digital assets on behalf of clients or investors.
- Blockchain performance issues: Challenges related to the scalability, speed, and efficiency of blockchain networks.