A new survey of institutional investors and wealth managers from the US, UK, France, Germany, and the UAE who collectively have $275bn in assets under management, has revealed that 76% describe the concerns about security of digital assets and custodial services as a "significant" hurdle preventing many from investing in cryptoassets for the first time.
The same percentage said this about the size of the market and liquidity, followed by 71% who see the regulatory environment for the crypto market as a major issue.
The survey, conducted online in May and June 2021, was commissioned by Nickel Digital Asset Management, a London-based FCA authorised and regulated investment manager that offers a range of digital asset strategy solutions for institutional investors.
It commissioned the market research company Pureprofile to interview 50 wealth managers and 50 institutional investors across the US, UK, France, Germany, and the UAE.
The survey was conducted online in May and June 2021.
Most significant hurdles preventing institutional investors from investing in cryptoassets for the first time:
- Quality of custodial services 76%
- Size of market/liquidity 76%
- Regulatory environment 71%
- Lack of transparency 69%
- Volatility 65%
- Lack of reputable fund managers offering investments in this area 64%
Anatoly Crachilov, co-founder and CEO of Nickel Digital,said: "Whilst many forward-looking institutional investors are increasing their exposure to digital assets, our findings show that concerns around security and custody of these assets remain a top concern for many other allocators.
In reality, the industry has achieved a very strong progress on that front, deploying a range of sophisticated cryptographic solutions, including distributed keys and MPC (multi-party computation) vaults, to create robust custody models.
In addition to crypto-native custodians, we are now seeing Fidelity, BNY Mellon, and State Street entering the market, thus further reenforcing market infrastructure. All of this increases the confidence levels in the sector and lead to ever-growing allocations to this fast developing asset class."
Henry Howell, Nickel's head of business development added:
"Security of clients' assets is paramount at Nickel. We deploy independent institutional-grade custody solutions, in partnership with US-based Fidelity and UK-based Copper.
These sophisticated solutions are based on air-gapped, multi-signature, cross-organisation custody models, thus mitigating single points of failure, typically associated with self-custody of crypto assets.
In our setup, the join control over assets is retained by independent Fund Administrator and Fund Custodian at all times."