39% of Institutional Investors in Canada Had Crypto Exposure in 2023: KPMG

Nearly four in ten Canada-based institutional investors had exposure to crypto assets in 2023, KPMG survey finds. This marks a significant recovery from the 2022 market slump.

The KPMG in Canada and CAASA survey highlighted that 39% of (or nearly 4 in 10) Canadian institutional reported having direct or indirect exposure to crypto assets in 2023, which is up from 31% in 2021.

“The last time we did this survey in 2021, it was a strong year for crypto assets,” says Kunal Bhasin, partner at KPMG in Canada’s Digital Assets practice.

He added that the following year was turbulent, shaken by major crypto firm collapses and increase in fraud. However, he said that these events had a “cleansing effect” on the crypto industry.

“Our survey findings suggest crypto assets are increasingly seen as an investible alternative asset class among such institutional investors and financial services organizations in Canada.”

Further, the poll shows a staggering increase in the institutional investors holding cryptocurrencies directly last year – 75% up from 29% in 2021.

Interestingly, their exposure to crypto via exchange-traded funds remain unchanged, given the US spot Bitcoin ETFs approval early this year. Consistently, 50% of investors have had exposure to crypto through ETFs and other regulated products since 2021.

The survey also highlighted a considerable increase in Canadian institutional investors, accessing crypto holdings via public equities and derivatives.

“A pivotal moment for cryptoassets came in January 2024, when the U.S. Securities and Exchange Commission (SEC) approved spot Bitcoin ETFs,” says Kareem Sadek from KPMG’s Digital Assets practice.

What Has Canada’s Crypto Adoption Been Like?

Mark Greenberg, Managing Director for Canada at Kraken told Nasdaq in an interview last year that crypto adoption continues to flourish and garner mainstream interest among Canadians.

“We are seeing increased adoption across all cohorts of Canadian marketplace, both from individuals and institutions and from differing demographics.”

Greenberg was optimistic at the time that crypto adoption will rise in Canada in the coming years. “I am bullish on cryptocurrencies globally and even more so in Canada where we have a high proportion of people underserved by the existing traditional financial system.”

On the global front, the crypto market would witness a significant increase in institutional interest this year, analyst Mathew McDermott of Goldman Sachs, noted.

“This would broaden and deepen liquidity in the market, attracting institutional investors such as pension funds and insurance companies who would otherwise be reluctant to directly engage with crypto-assets,” McDermott said early this year.