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Crypto Asset Adoption Soars: 39% of Canadian Institutional Investors Dive In

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Canadian institutional investors showed a significant surge in crypto asset investments in 2023, with 39% of respondents revealing direct or indirect involvement in these assets. This marks a noticeable increase from the 31% reported in 2021. Moreover, one-third of these investors allocated 10% or more of their portfolios to crypto assets, indicating a growing confidence in the sector.

The findings emerged from a comprehensive survey conducted by KPMG in Canada and the Canadian Association of Alternative Assets and Strategies (CAASA). The study targeted both financial services organizations and institutional investors operating within Canada. The results portrayed a notable uptick in crypto asset engagement across the board.

Financial services organizations exhibited a substantial expansion in crypto-related offerings. Half of the respondents stated that their organizations actively provided at least one type of digital asset service to clients, a marked increase from 41% in 2021. The most common services included trading, custody, clearing, and settlement services, and quantitative trading.

Growing Appetite For Crypto Among Institutional Investors

Institutional investors, on the other hand, showcased a growing appetite for digital assets, with 39% reporting exposure to these assets in 2023, up from 31% in the previous year. Notably, 75% of these investors held crypto assets directly, while others accessed the market through various regulated products such as exchange-traded funds (ETFs) and derivatives.

Kunal Bhasin, partner and co-leader of KPMG in Canada’s Digital Assets practice, highlighted the industry’s resilience despite recent turbulence. He attributed the crypto rally of 2023 to factors such as rising U.S. debt and increasing inflation, positioning crypto assets as alternative investment options and stores of value for institutional investors.

Kareem Sadek, Emerging Technology Risk leader at KPMG, emphasized Canada’s role in fostering a conducive regulatory environment for digital asset innovation. He noted that regulatory approvals for Bitcoin and Ethereum ETFs, alongside other supportive measures, have bolstered investor confidence in the sector.

The survey also revealed a growing trend of diversification within digital asset investments. Institutional investors employed a variety of strategies to gain exposure, including direct ownership, investment in regulated products, and participation in venture capital or hedge funds specializing in digital assets.

Experts in the industry predict that there will be more institutional adoption of cryptoassets by companies within Canada. They recommend education as priority number one; strategic planning secondly and then finally due diligence when entering this new market.

Related Reading | Bitcoin ETFs Hit Record $3.62B: BlackRock’s Mighty Streak Snapped

KPMG Buys World of Women NFT for 25 ETH

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KPMG in Canada stated that it had finalized the purchase of a digital art NFT from the World of Women collection.

Benjie Thomas, Managing Partner, Advisory Services, commented on the purchase. A spokesman informed through an email that the NFT, Woman #2681, was acquired on February 13 for 25 ETH before being moved to a second wallet.

He stated that this acquisition represents their optimism in the future expansion of NFTs and also in the value of WoW and its mission.

He went on to say that NFTs allowed businesses to communicate with their consumers in new ways and allowed for the secure digitalization of assets.

“NFTs have a wide range of applications. Retailers and sports leagues and auction houses, celebrities, and non-profits are already using NFTs to sell their brands, attract talent, generate value, raise awareness for issues, and engage with customers.”

Kareem Sadek, co-leader of KPMG’s crypto assets and blockchain services, stated. He also believes that web3 will revolutionize the way consumers connect with companies, socialize, and exchange digital assets.

The company also stated that it owns kpmgca.eth, an Ethereum Name Service (ENS) domain name that makes it easier to utilize wallet addresses.

WoW NFT collection opening doors for female empowerment

The WoW, or World of Women, group wants to recruit more individuals into the NFT environment, particularly women, and to create a more inclusive web3 platform. Through charitable giving, the group promotes women’s and environmental initiatives all across the world.

Their first NFT collection debuted in July 2021, with the second set to debut in 2022.

10,000 first edition NFT artworks of varied, inspirational, and powerful women living on the blockchain are included in the WoW collection. Many of their female avatar art pieces have become sought-after collectibles.

The purchase by KPMG follows a cryptocurrency investment in Bitcoin and Ethereum. To meet the firm’s declared environmental, social, and governance (ESG) obligations, KPMG acquired carbon offsets to maintain a net-zero carbon transaction.

Although this is the firm’s first NFT investment, it is not its first excursion into digital assets. It plans to leverage its knowledge of the digital asset market to assist customers in developing effective strategies.

“Uber to allow crypto payment in the near future”-CEO

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US-based mobility service provider Uber might soon add crypto to their list of accepted payments options. This was revealed by Dara Khosrowshahi, CEO of Uber, who said in a Bloomberg interview that the firm would “absolutely” accept cryptocurrency in the future. 

According to the ride-sharing firm’s boss, customers will eventually be able to use bitcoin to pay for their trips, though the company is waiting for a couple of improvements before it gives the go-ahead signal..

Khosrowshahi said the company is “having conversations all the time” on whether it should begin to accept cryptocurrencies as a form of payment.

“Is Uber going to accept crypto in the future? Absolutely, at some point,” Khosrowshahi told Bloomberg.

The exec however told the news outlet that it has been a little slow in jumping on the cryptocurrency bandwagon due to concerns of the environmental impact of mining as it requires an enormous amount of electricity and the high transaction cost between exchanges.

As the exchange mechanism becomes less expensive, becomes more environmentally friendly, I think you will see us lean into crypto a little bit more,” he added.

Critics of digital assets have always maintained that such assets are prone to extreme volatility and raised questions on the feasibility of considering digital assets as a form of payment. At the time of this post, the price of bitcoin was hovering at $42,149, which has posted a marginal recovery over the week but is still considerably down from its all-time high of $69,000 last November.

Major firms leaning towards crypto

Many major companies have gradually warmed up their stance to embrace cryptocurrencies in transactions in recent years. Microsoft began accepting bitcoin as a form of payment in its online store back in 2014.

In January, Tesla started accepting the meme token Dogecoin for some merchandise in its online store. Its CEO Elon Musk is a longtime supporter of bitcoin, Dogecoin, and other cryptocurrencies. Musk has also inspired other companies to follow his lead.

Last month, the billionaire said that he would agree to eat a Happy Meal on television if fast-food giant McDonald’s started accepting Dogecoin.

A few days ago TronWeekly had reported on one of the big four accounting firms’ KPMG announcement to add bitcoin and ethereum to their balance sheet.

KPMG joins the list of top MNCs embracing crypto; adds BTC and ETH to its corporate treasury

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Canada-based accounting giant KPMG announced that it has added cryptocurrency to its balance sheet making it the firm’s first such direct investment in digital assets. However, the consulting firm did not specify the exact amount of bitcoin and ether purchased, at the time of this post.

As per the press release, the allocation included Bitcoin [BTC] and Ethereum [ETH], with the support of Gemini Trust Company LLC’s execution and custody services.

In addition to that, KPMG has formed a governance committee to ‘provide oversight and approve the treasury allocation.’ The committee comprised of various stakeholders belonging to different domains such as Finance, Risk Management, Advisory, Audit, and Tax.

After gaining insights, the firm then conducted and completed a thorough risk assessment process that included a review of regulatory, reputational, and custodial risks. Experts at KPMG also assessed the tax and accounting impact of the transaction.

KPMG Exec, “Cryptoassets are a maturing asset class”

Benjie Thomas, KPMG’s Managing Partner at the Advisory Services, Canada termed cryptocurrencies as a maturing asset class. And went on to add,

“Investors such as hedge funds and family offices to large insurers and pension funds are increasingly gaining exposure to crypto-assets, and traditional financial services such as banks, financial advisors, and brokerages are exploring offering products and services involving digital assets This investment reflects our belief that institutional adoption of these and blockchain technology will continue to grow and become a regular part of the asset mix.”

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The recent investment demonstrates the changing stance of some of the world’s biggest multinational corporations towards emerging technologies underpinned by blockchain.

Echoing similar sentiments Kareem Sadek who work as an Advisory Partner, Cryptoassets and Blockchain Services at KPMG also said that the crypto industry has grown by leaps and bounds and that it needs to be considered by traditional financial services and institutional investors.

Having said that the accounting firm also plans to build on its capabilities in the Decentralized Finance [DeFi], Non-Fungible Tokens [NFTs], and the Metaverse in the near future as it expects to see a lot of growth in these areas in the years to come.