Institutional investors are planning to increase digital asset holdings, says a new report by OKX that two main factors will determine how much they invest.
Mainstream institutional investment firms don't hold much by digital assets. OKX is betting that's about to change.
For those investors, “crypto is still considered a frontier asset class,” said Lennix Lai, global chief commercial officer at the exchange. News.
But, according to the firm's report, Lai said, “many investors are looking to take crypto into their portfolios.”
Most crypto trading is centered around Bitcoin and Ether. But more options are emerging, such as spot exchange-traded funds, crypto derivatives and stablecoins.
The report cites the average allocation to crypto in investment firms' portfolios at around 1%.
According to the report, some investors expect to increase their digital asset allocation to 7% by 2027.
However, two factors determine investor appetite for digital assets.
Better control
One driver of institutional investors' crypto investments is the new crypto custodians.
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“Segregation of duties is a fundamental requirement for large hedge funds and family offices to invest in any type of asset class, including crypto,” Lai said.
“Trading should be separated from assets in custody.”
The problem with digital assets is that they reside on the Internet and are vulnerable to risks such as hacks, system failure or loss of private keys, the report said.
This leads to the emergence of custodians who combine the technology to keep crypto under control, combined with security standards to suit cautious organizations.
control
The second factor is rules.
The report states that organizations feel more confident in their custodians when they are subject to regulatory standards, particularly on security. Regulators are extending these standards to digital assets.
The US Securities and Exchange Commission, for example, has proposed an adjustment to its rules for investment advisers that would require them to hold crypto with so-called “qualified custodians,” such as banks.
Industry heavyweights like Coinbase protested the rules. However, qualified custodians are “emerging as trusted partners for institutional investors,” the report said.
Crypto market movers
Bitcoin is down 3.8% in the last 24 hours, trading at $60,034 Ethereum is also down 3.8%, now at $2,528
What are we studying?
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Joanna Wright writes about markets News. arrive at [email protected].
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