Institutional Investors Take a Long-Term View on Digital Assets

AT A GLANCE

  • Institutional investors increased allocations during the crypto winter, with many using this as an opportunity to onboard crypto to learn and build for the future.
  • Investors top motivation for investing in crypto is improved performance, with many citing their desire to allocate to innovative technology. 
  • Despite heightened uncertainty, digital assets were seen as offering one of the most attractive opportunities to generate alpha. 
  • Institutional investors cited regulatory compliance as a top criterion for selecting a crypto partner and viewed regulatory clarity as an important catalyst for future growth.

Institutional Investor conducted a survey among a representative sample of institutional investors who are invested in digital assets or plan to invest in the next 12 months to understand how they are navigating the crypto winter and how they respond to periods of stress in the market1.The survey covered 140 investors representing $2.6 trillion in assets under management and was conducted between September 21 and October 27. The study was conducted independently by Institutional Investor. Coinbase was not involved in sourcing the respondents, and the respondents may or may not be Coinbase clients.

Results provide valuable learnings on investor needs and evolving views of the asset class. The study validates that investors are taking a long-term perspective in allocating to digital assets, and offers insights on how they are likely to adjust short-term risk-return expectations given recent events. Findings from this survey provide good context to help move the conversation forward on what needs to happen next in the industry.

Here are key themes revealed by the survey:

  • On the top factor impacting their decision to invest: Nearly two-thirds (64%) of crypto intenders cited the need for regulatory clarity as a top consideration in their investment process.
  • On how they choose crypto partners: Investors ranked regulatory compliance, security, and trust as the top three factors to consider. In light of the volatility in crypto this year, there is a larger spotlight on how firms operate differently in meeting investor needs and have made this finding more relevant than ever.
  • On 3AC, Terra Luna, crypto contagion: Nearly half (47%) of investors said that these events should accelerate the timeline for much-needed regulation. More than a third (36%) said it should spur firms to adopt better risk management strategies.

The findings are a clear call to action for the industry that will impact institutional investors confidence and adoption in the years to come. 

Top factors considered in selecting a crypto partner

Source: Institutional Investor 2022 Digital Assets Outlook Survey 

  • Investors see the next industry growth catalysts in new applications, more educated investors, and more regulatory clarity. 72% of investors cited more real-world applications that have a more mainstream audience as the top catalyst for growth, followed by more knowledgeable investors (41%) and greater clarity and guidance from regulators (37%).

Results from the survey clearly indicate that investors have continued to invest and are taking a long-term perspective despite the crypto winter. They are using this environment to hone their knowledge and build the infrastructure to prepare for the future. It is also clear that views on the asset class are evolving and that there is a pressing need for regulatory clarity. Regulatory clarity is needed to accelerate innovation, to make capital deployment easier and to ensure a level playing field.

Access the full research report here.


1 The survey was conducted by the Institutional Investor Custom Research Lab using an online survey to understand how investment decision makers of US investment institutions view digital assets. A total of 140 institutional investors in the US participated in the survey, representing assets under management of about $2.6 trillion. The audience for the study involved a representative sample of institutional investors. The survey was conducted independently by Institutional Investor and Coinbase was not involved in sourcing the respondents. 

2 Coinbase Institutional, 2022. Institutional Allocator Survey. Unpublished study.