KPMG Survey Finds 75% of Canada’s Institutions Owned Crypto Assets in 2023

According to a KPMG survey conducted in 2023, institutional investors based in Canada notably boosted their investments in cryptocurrencies.

Recently, our consulting firm carried out its semi-yearly study on the adoption of cryptoassets by Canadian institutions. The results revealed a renewed interest in crypto from the investment community following a challenging year for the sector in 2022.

“The surge in U.S. debt along with rising inflation may have sparked the cryptocurrency market boom in 2023, according to Kunal Bhasin, partner and co-leader of KPMG in Canada’s Digital Assets practice. He adds that based on their recent survey, crypto assets are gaining popularity among Canadian institutional investors and financial services organizations as a hedge against debasement and a secure means of storing value.”

Institutional investment in cryptocurrencies experienced a significant surge, rising from 29% in 2021 to 75% by the end of 2023.

Approximately 67% of the survey participants, consisting of hedge funds, family offices, pension funds, private equity, and venture capital firms, held investments in crypto-linked public stocks in contrast to the 36% reported in 2021.

It appears that there was a significant rise in the demand for cryptocurrency derivative products, as indicated by 42% of the firms disclosing exposure compared to the previous 14%.

In the wealth management sector, there was a notable decrease in the number of firms providing cryptocurrency financial advice to their clients. This went from 42% in 2021 to just 14% as of now.

Last year, several cryptocurrency businesses shifted a significant portion of their operations to Canada due to increased regulatory pressure in the United States. One notable example is Coinbase, which expanded its presence on the Canadian West Coast. The company expressed appreciation for Canada’s more collaborative regulatory style compared to the U.S., which focuses more on engagement than strict enforcement.

“KPMG’s Kareem Sadek, digital assets co-lead and emerging technology risk expert, noted Canada’s significant influence in shaping regulations that foster innovation in cryptocurrencies. This regulatory landscape, combined with surging crypto asset values, has drawn institutional investors towards the crypto sector.”