Nearly Half Of Institutions Are Holding Digital Assets For Clients: Report

Institutions are not only oblivious to the crypto bear market—they are outright bullish.

That’s according to crypto data provider Amberdata, which teamed up with global financial services analyst Coalition Greenwich to research how asset managers are approaching digital assets.

In their Digital Assets: Managers Fuel Data Infrastructure Needs report, published Wednesday, the firms assessed sixty asset managers from the U.S. in its majority, Europe and the U.K. The entities include hedge funds, venture capital firms and family offices.

For Amberdata CEO Shawn Douglass, the most striking finding was that nearly half (48%) of asset managers currently have digital assets under management.

⛽️ Today we announced the publication of a new digital assets research report in partnership with @CoalitionGrnwch – Digital Assets: Managers Fuel Data Infrastructure Needs

Huge thanks to @deasthope of Coalition Greenwich for the phenomenal research! https://t.co/KFiikoSCj5 pic.twitter.com/kuViW01u7h

— Amberdata (@Amberdataio) September 6, 2023

The figures for digital assets under management (AUM) among these entities vary, however. The bulk fall in the lower bound, with 22% reporting between $1-10 million. An additional 19% currently hold between $11-50 million in crypto for their clients, while just one institution operates more than $1 billion in digital assets.

The asset managers surveyed, according to Amberdata’s Douglass, are quite large in size as well. Roughly a third reported greater than $5 billion in AUM across all asset classes, with around another third declaring $1-5 billion in AUM. The remainder held under $1 billion in AUM across all asset classes.

Douglass added to Decrypt that it was “interesting to see that the respondents were so bullish on the U.S. positively supporting digital asset adoption, despite the lack of a clear regulatory environment.”

As reported by Amberdata and Coalition Greenwich, 85% of respondents considered that “despite near-term challenges,” the SEC and CFTC are expected to provide positive opportunities moving forward.

Crypto roadblocks remain

However, concerns remain. For the 52% of institutions currently not involved in crypto, Douglass explained that the regulatory environment is one of several potential roadblocks.

They include, “in no particular order,” the lack of a common KYC/AML technology, unclear tax policies, the complexity of custodying digital assets, challenging security practices, and blockchain performance issues.

Further down, the report illustrates how serious institutions are at providing specialized crypto services.

One in every four institutions surveyed reported that they currently have a dedicated role focused on digital assets, a number expected to grow by 13% over the next twelve months.

This flies in the face of the grueling crypto bear market currently underway, shining a light on how many institutions are prioritizing crypto products and services moving forward.

Douglass concluded with what he considered a notable finding. “Even after the collapse of FTX, most asset managers expect centralized exchanges to grow over the next five years.”