The digital arm of Fidelity Investments Inc., Fidelity Digital Assets published the findings of its research on Thursday, May 2. According to the company, institutional investments in the cryptocurrency space are likely to increase over the next few years.
This conclusion was reached after Fidelity found out in its research that almost 50 percent of the surveyed institutional investors believe digital assets have a place in their investment portfolio.
Institutional Investors Have Favorable Views on Digital Assets
New research carried out by Fidelity Investments showed that the number of institutional investors in the cryptocurrency space is likely to increase over the next half a decade. The investment firm surveyed over 400 investors in the United States, including pensions, family offices, crypto, traditional hedge funds, financial advisors, endowment, and foundations.
According to the research findings, 47 percent of the surveyed institutional investors believe digital assets have a place in their investment portfolios. However, the response was varied in regards to how they would invest in cryptocurrency assets.
Amongst this group, 72 percent of them would prefer to buy investment products that hold cryptocurrencies, while 57 percent would prefer to purchase crypto assets directly. Meanwhile, 57 percent would prefer to purchase investment products that hold cryptocurrency asset companies.
Also, out of the 47 percent that is willing to venture into digital asset investments, 32 percent see them as part of an alternative asset class while the remaining 15 percent believe they are an independent asset class.
Digital Assets Have Appealing Characteristics
In addition to the above, a large percentage of the respondents find cryptocurrencies to have attractive features. Around 47 percent of the institutional investors appreciate that crypto assets are an innovative technology play. Another 46 percent believe crypto assets low correlation to other assets is an appealing characteristic. Meanwhile, 74 percent of financial advisers and 80 percent of family offices have favorable views on digital assets.
Tom Josep, the President of Fidelity Digital Asset, stated that there had been an increased interest in crypto assets asides early adopters. Cryptocurrency hedge funds and other traditional institutional investors such as endowments, foundations, family offices and more are getting involved in the new market, he added.
Some of the institutional investors showing interest in cryptocurrencies either own digital assets and need a custodian or they wish to invest in crypto assets but need a custodian before doing that.
So far, 18 percent of the respondents said they are using third-party custodians while 13 percent serve as their own custodians. Also, 6 percent of those with digital assets are using non-custodial exchanges.
While the institutional investors don’t mind getting into crypto, most of them would like to deal with traditional financial companies. According to the survey, 37 percent of the respondents prefer to deal with traditional financial firms and 24 percent would prefer to deal with dedicated crypto-focused financial firms.
Fidelity Digital Assets noted that the sentiment from institutional investors is one of the positive developments they have observed. The increase in venture developments, great development works by crypto projects, and more regulatory conversations have seen institutional investors become more interested in the crypto space.
The research was carried out by Greenwich Associates on behalf of Fidelity, with 441 institutional investors in the United States surveyed between November 26, 2018, and February 8, 2019.