Concerns over security are the biggest obstacle preventing institutional investors and wealth managers from investing in crypto and digital assets finds Nickel Digital Asset Management (Nickel), the digital assets hedge fund manager.
A survey of institutional investors and wealth managers, who collectively manage around $108.4billion in assets, revealed that 79 per cent cited asset security as one of the top three reasons for not investing in cryptocurrencies and digital assets. This was followed by 67 per cent who said price volatility, 56 per cent who cited market cap, and 49 per cent who said the regulatory environment. Further 12 per cent included the carbon footprint from Bitcoin and other cryptocurrencies in their top three reasons for not investing.
Gary Gensler, the chair of the US Securities and Exchange Commission has called on Congress to provide the agency with more authority to police cryptocurrency trading, lending, and platforms and 76 per cent of the professional investors interviewed believe this will be granted next year. If the SEC is granted these extra powers, 73 per cent of institutional investors and wealth managers believe this will have a positive impact on the price of crypto and digital assets – 32 per cent believe it will have a very positive effect.
Henry Howell, Head of Business Development at Nickel Digital, commented: “Our research shows that institutional investors have correctly identified custody and security as a critical differentiator to this unique asset class. At Nickel Digital, we have helped drive the innovation and institutional-grade solutions that are paramount to the largest investors in the world. As a result, we are seeing more institutional investors investing in digital assets for the first time, and those that already have exposure are making further allocations.”
Nickel Digital’s infrastructure is designed to offer various access points to the crypto market
Nickel currently has four funds investing in the digital asset space:
- Its market-neutral Digital Asset Arbitrage Fund pursues an absolute return strategy without expressing directional views on the underlying crypto assets market.
- Diversified Alpha Fund is a non-directional multi-strategy fund that wraps a portfolio of attractive but hard-to-access and capacity-constrained strategies into a single, investible fund. Among the strategies it deploys are high-frequency market making, statistical arbitrage, relative value, volatility arbitrage, and trend following.
- DeFi Liquid Venture Fund is designed to capture the growth potential of the broader digital assets space outside Bitcoin, spotting early winners in Layer 1 protocols and Decentralised Finance, the area of greatest financial innovation.
- Nickel’s Digital Gold Institutional Fund, a Bitcoin tracker, provides secure, efficient, transparent, and liquid access to physically allocated Bitcoin.