Cryptocurrency Attracts Institutional Investors, But They Await Traditional Fina...

A recent survey by Nomura’s digital asset division unveils a fascinating trend: professional investors maintain their interest in cryptocurrency. However, they eagerly anticipate endorsement from prominent traditional financial institutions before joining.

The Impact of Regulatory Uncertainty on Institutional Crypto Investments

In recent weeks, cryptocurrency investment enthusiasm from institutional entities has witnessed a temporary slowdown. This trend can be largely attributed to the escalating regulatory ambiguity in the United States and the subsequent enforcement on the broader industry.

According to the Laser Digital Investor Survey executed in April, 90% of surveyed professional investors emphasized the necessity for backing a “large traditional financial institution” before considering cryptocurrency asset funds or investment vehicles for themselves or their clientele.

Interestingly, 96% viewed digital assets as an “investment diversification opportunity” – a refreshing alternative to traditional asset classes like fixed income, cash, equities, and commodities.

Crypto Asset Class Optimism Among Institutional Investors 

Additionally, the survey indicates that 82% of professional investors are optimistic about the prospects of the crypto asset class over the forthcoming 12 months. Bitcoin and Ether (ETH) were explicitly highlighted, with nearly half the participants acknowledging them as the bedrock of the burgeoning Web3 economy and a “sustainable source of investment opportunities.”

Dr. Jez Mohideen, CEO of Laser Digital, argues that the study illustrates the institutional investors’ recognition of a “distinct role for digital assets in the investment management landscape,” noting the myriad benefits they can offer, including the diversification of portfolios.

Yet, approximately three-quarters of them expressed concerns that “legal or regulatory restrictions” might deter their firms or clients from funneling investments into crypto-related funds or products.

Regulatory Challenges and Opportunities in the Global Landscape

Following the FTX debacle in November, global regulators have exerted stringent control on the digital asset sector. Nonetheless, many nations proactively establish regulations to govern this new asset class, indicating a potential future shift in acceptance and regulation.

Laser Digital conducted an independent worldwide survey, engaging institutional investors across 21 nations spanning Europe, the Middle East, Asia, South Africa, and Latin America. The study included over 300 institutional investors managing collective assets amounting to $4.9 trillion, comprising wealth managers, pension funds, hedge funds, investment funds, and insurance asset managers.

Asia: The Next Crypto Industry Growth Epicenter

The subsidiary of the Japanese banking behemoth is setting its sights on Asia for the forthcoming cryptocurrency industry growth. On June 13, Mohideen affirmed that regulatory lucidity in Japan and Hong Kong could stimulate retail participation. In his words, “Asia benefitted from what happened in the US and realized the things they need to avoid,” indicating a potential shift in global cryptocurrency market leadership.

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