[Megaphone Moment] New Fidelity Survey: Institutional Investors are Gaining Interest in Crypto
Earlier this year, Fidelity began custody service to hold Bitcoin for its customers. As a part of preparation for this and to build on its Fidelity Digital Assets business, they surveyed how institutions felt about owning cryptocurrencies, including pensions, family offices, hedge funds, endowments, and foundations. What they found was surprising.
The survey questioned a total of 441 institutional investors between November 2018 and February 2019. It found that 57 percent would choose to buy digital assets directly while 72 percent preferred to buy investment products holding digital assets. President of Fidelity Digital Assets Tom Jessop said in an interview:
“That’s interesting because I’d argue that no one owns dollars or euros in a fund.”
Jessop also noted that the survey itself was done during a bear market, a moment when values of cryptocurrencies have dropped substantially from their late 2017 all-time highs.
Survey participants did have big concerns, including regulation uncertainty, a lack of fundamental price determinations, and market volatility. The market itself is also struggling with a plague of fraud and theft issues, something made easier by its lack of regulations. Where there are regulations, because it is such a new and unknown market territory, there are also a lot of regulatory infractions.
One such case is currently happening in New York against Bitfinex. The attorney general has accused the large Bitcoin exchange of hiding the loss of about $850 million in corporate and client cash. There is also Quadriga Fintech Solutions Corp. up in Vancouver that is currently going through bankruptcy after the surprise death of founder Gerald Cotten last year whom hid the digital keys to client assets that have yet to be found. Over 115,000 clients of the company are owed $193 million in cryptocurrencies and cash.
Black marks such as these are likely holding investments from serious traditional investors but the survey itself is further proof of the changing of the tide.
Furthermore, proponent of digital assets and Chief Executive Officer Abigail Johnson is using her position to help change that. Setting herself apart from her rivals, Johnson had the firm begin mining Bitcoin in 2015 betting that the firm’s assets will appeal to Wall Street’s appetite for trading and safeguarding digital currencies.
Jessop further echoed these assumptions and goals in an interview:
“people are relying on the institutions they’ve done business with for a long time to fulfil their objectives and needs. I’m not trying to throw shade on anybody else, but it’s up to the clients to decide.”
The survey, which was done with Greenwich Associates, also found that 47 percent of institutional investors thought digital assets were worth investing in, the same amount said they appreciate crypto for being innovative, and 46 percent like that cryptocurrencies have a low correlation to other asset classes.