Sygnum’s latest report, Future Finance 23, surveyed traditional investors to get their feedback on a wide range of crypto-related topics.
Sygnum, a global digital asset banking group with Swiss and Singapore heritage, has released its inaugural institutional investor crypto survey report, Future Finance 23.
The report polled over 150 institutional investors on their attitudes towards cryptocurrencies, of which 60% of respondents have over a decade of institutional investment experience, and 76% of respondents have a high to advanced understanding of technical crypto and blockchain language. Overall, the survey aims to measure the institutional adoption of crypto, along with tracking ongoing trends, and profiling the needs and challenges faced by potential institutional entrants into the crypto market.
The survey delve into four major areas of consideration – current crypto asset allocation, investment strategies, products and services, and barriers to investment. In summary, the survey found that a majority of institutional investors see crypto as an opportunity to participate in expected market
upside, single token exposure is the most preferred crypto investment strategy, and there is demand for tokenised real-estate.
Here are some key details from the Future Finance 23 report.
Almost 9 Out Of 10 Invest In Crypto
When asked if they invest their holdings in cryptocurrencies, 89% of the respondents surveyed answered ‘yes’ to the question. This indicates that almost 9 out of 10 institutional investors are invested in crypto, and are considered crypto-activated. Compared to the institutional outlook a year ago when the market outlook was more grim at the end of 2022, the results remain mostly steadfast when we look at Coinbase’s 2022 Institutional Investor Survey. All in all, institutional investors continue to remain committed when it comes to investing in cryptocurrencies.
Protocol Infrastructure Is Still King
According to the Future Finance 23 report, 87% of the respondents are invested in blockchain protocols, especially established ones like Bitcoin, Ethereum and Solana, all of which are considered Layer-1 protocols. A quick refresher, blockchain protocols form the infrastructural basis for all other smart contracts, functions, and applications.
When zooming out to include other token assets that represent decentralised applications (dApps), non-fungible tokens (NFTs), and stablecoins, 20% of the respondents only invest in Layer-1s, more
than half invested in dApps, over a third in stablecoins, and a quarter in NFTs.
Unsurprisingly, Layer-1 protocols are still a popular choice of area to invest in for institutional investors. An earlier report, the State Of European Crypto Funding Report 2023, by venture capital firm RockawayX also indicated that funding in blockchain infrastructure is on the rise, which led by Layer-1s and developer tooling.
Asset Ownership, Yield Gen, And Managed Exposure Comes Up Top
When polled on their crypto investing strategy, the respondents’ top three answers were Single Token Exposure (43%), Actively Managed Exposure (30%), and Yield Generation (30%).
This overlaps with the wants of the respondents in terms of the products and services that they are keen to see more of, and the ones that they are most interested in. Crypto trading (68%), Custody (64%), Staking (58%), and Asset management (42%) correlates to the strategy directly and topped the list of wanted products, while Direct Token Investments (84%), ETPs / ETFs (42%), and On-chain Asset Management (28%) were some of the crypto asset products that respondents were most interested in.
The desire for single token exposure indicates a strong conviction to generate alpha from specific established tokens like Bitcoin and Ethereum, and the high interest in crypto trading reflects the strong focus on direct token investments and the preference to custody their own digital assets. Meanwhile, preference for active management may indicating a higher demand for expertise and market analysis to boost outperformance potential.
Regulatory Clarity Is Still On Everyone’s Mind
Whether it’s local or abroad, 2023 has been a fruitful year in making headways towards a more regulated environment. Singapore has recently implemented more retail consumer protection laws, and regions such as Europe has successfully introduced the comprehensive Markets in Crypto-Assets Regulation.
Nevertheless, one of the biggest issues investors continue to have with cryptocurrencies is the lack of regulatory clarity (70%), followed by the lack of trust (46%). At the same time, they agree that better quality information of crypto assets will encourage them to invest more (73%), and more regulated service providers are essential to building trust in the crypto market (85%).
Read the full report on their website here.
