Investing in cryptocurrencies is increasing, as shown by a new survey by KPMG. The survey revealed that 22 per cent more financial services organizations offered cryptoasset products and services to clients in 2023 compared to 2021. Additionally, 26 per cent more institutional investors included cryptoassets in their portfolios in the same timeframe. Half of financial services respondents said their organizations were actively offering cryptoasset products, while 39 per cent of institutional investors reported having exposure to cryptoassets. The survey collected responses from 65 entities, including 31 institutional investors and 34 financial services organizations.
Financial services organizations have expanded their crypto-offerings, offering an average of two to three services in 2023, compared to one to two services in 2021. Kunal Bhasin, a partner at KPMG specializing in cryptoassets, noted that client demand for cryptoasset services has been a major driver for this expansion. He mentioned that institutional investors are primarily responsible for the growing demand for cryptocurrencies, with most looking to invest in the asset for the long term rather than short-term gains. The rising value of cryptocurrencies, particularly Bitcoin, which saw a 150 per cent increase in 2023 and a 50 per cent increase in 2024, has also played a role in driving interest.
Investors are increasingly drawn to cryptocurrencies due to factors such as the maturing crypto market, security measures in place for digital assets, and strong market performance. According to the survey, 67 per cent of investors cited these reasons as key factors influencing their decision to invest in cryptoassets. Additionally, 58 per cent mentioned strong market performance as a motivator for their involvement in cryptocurrencies. Despite the recent fraud case involving Sam Bankman-Fried’s FTX crypto-trading platform, where more than $8 billion was stolen leading to Bankman-Fried being sentenced to 25 years in prison, the industry has emerged stronger. New frameworks and risk management strategies have been implemented to enhance security measures.
Bhasin emphasized that the industry has rebounded from the fraud case and that major institutions have re-entered the space, giving cryptocurrencies a sense of maturity that has attracted more participants. He noted that while some institutions initially withdrew after the fraud was uncovered, they have since returned to the market. Bhasin mentioned that the industry has become more vigilant in identifying and addressing fraudulent activities, indicating a shift towards stronger risk management practices. He expressed confidence that cryptocurrencies are here to stay despite challenges and emphasized the importance of addressing fraud and misconduct openly and promptly to ensure the industry’s credibility and sustainability.
In conclusion, the survey by KPMG highlights the increasing interest and involvement in cryptocurrencies among financial services organizations and institutional investors. The growing demand for cryptoasset products and services, driven by factors such as client demand, market performance, and security measures, has led to an expansion in offerings. Despite challenges such as fraud incidents, the industry has adapted by implementing new risk management strategies and frameworks to strengthen security measures. The involvement of major institutions in the crypto space has contributed to a sense of maturity, attracting more participants. Overall, the survey indicates a positive outlook for the future of cryptocurrencies, with continued growth expected in the coming years.
