Improvements to digital asset regulatory frameworks are the main reason convincing professional investors to take their first stakes in the sector, according to new global research (1) by London-based Nickel Digital Asset Management (Nickel), Europe’s leading digital assets hedge fund manager founded by alumni of Bankers Trust, Goldman Sachs and JPMorgan.
Its study with institutional investors and wealth managers found more than two out of three (68%) firms planning to invest in digital assets for the first time in the next 24 months say regulatory improvements are among their top three reasons for doing so ahead of 54% citing the potential for capital growth.
Nearly half (44%) said greater stability in the sector and growing evidence that digital assets can improve diversification as key reasons for investing for the first time while 42% say increased interest from large financial institutions is encouraging them to invest,
The research with executives at firms in the US, UK, Germany, Switzerland, Singapore, Brazil and the United Arab Emirates which collectively manage over $14 trillion in assets found 50% of those who have not yet invested will choose digital asset ETFs while 28% will select Bitcoin and 17% mutual funds in the sector.
Price volatility and security concerns were the two key reasons preventing them from investing until now, the study found with worries about market manipulation, lack of regulatory clarity and concerns around custody issues also major barriers.
The study which focused on firms planning to invest for the first time in the next 24 months found 82% expect to invest in the digital assets sector in the next 12 months with 7% planning to do so in the next six months.
Anatoly Crachilov, CEO and Founding Partner at Nickel Digital, said:
“The growth potential of digital assets is now well established, and their role in portfolio diversification is increasingly recognised.”
That said, regulatory clarity remains essential in providing reassurance to more new incoming institutional investors, many of whom must win internal debates around the timing and structure of allocations, with ETFs often forming a key part of that discussion. Robust regulatory frameworks are critical to enabling the asset class to mature responsibly and will serve as the foundation for broader institutional adoption.”
