Survey: Cryptocurrency Safety Is The Top Concern For Institutional Investors, Apart From Volatility

  • A recent Nickel Digital survey shows that major market players will find a lack of cryptocurrency security solutions to engage in crypto.
  • Better regulatory clarity in 2022 is likely to push more institutional players toward encrypted adoption.

2021 was the year in which the cryptocurrency market reached record levels thanks to the increased participation of institutional players. According to the latest CoinShares report, institutional crypto inflows for 2021 stood at a record high of $ 9.3 billion.

However, the latest survey from European regulated digital asset hedge manager Nickel Digital Asset Management concludes that institutional players are not engaging as far as they could. The report cites security concerns as one of the key issues preventing them from further engaging with cryptocurrencies.

Indeed, security concerns outweigh these institutional actors, in addition to price volatility. The survey was conducted by talking to institutional investors and wealth managers from the US, UK, Germany, France and the UAE.

The 100 respondents who took part in the survey collectively manage assets worth more than $ 108.4 billion. Of these, 79% consider the retention of crypto assets to be a key factor in making investments. When Nickel Digital conducted its previous survey in July 2021, that figure was 76%.

This could possibly be related to the increase in the number of crypto crimes over the past year. According to Chainalysis blockchain analysis platform, crypto crimes hit a record in the last year of 2021. In real numbers, the value received by such illicit addresses increased to an all-time high of $ 14.03 billion.

The regulatory landscape for cryptocurrencies

In the Nickel Digital survey, respondents also highlighted other key reasons for not investing aggressively in crypto. The report states:

This was followed by (safety concerns) 67% said there was price volatility, 56% said market capitalization, and 49% said regulatory environment. In addition, 12% included the carbon footprint of Bitcoin and other cryptocurrencies as their top three reasons for not investing.

In his previous survey, conducted in July 2021, 71% of concerns related to regulatory issues were upheld. This has now been greatly reduced to less than 50%.

In addition, more than 75% of those interviewed believe that the US Securities and Exchange Commission (SEC) will have more power to oversee digital assets in 2022. 73 percent of those believe that it will have an overall positive impact on equity. market. cryptocurrencies.

Last year, SEC Chairman Gary Gensler called on the U.S. Congress to give the securities regulator more power to oversee the cryptocurrency market. “We have a role as a nation to protect those investors against fraud,” he said.

Apart from that, even the major players in the sector also believe that regulation will be crucial to drive better institutional adoption. Sam Bankman-Fried, founder of FTX crypto exchange, recently spoke in similar terms. He believes that as greater regulatory clarity emerges, more and more institutions will become involved. In addition, cryptocurrencies will act as an adequate hedge amid current fears of rising inflation.

Esdras Collins

Esdras Collins is an early investor in bitcoin and a veteran trader in the cryptocurrency and foreign exchange markets. He is fascinated by the complex possibilities of blockchain technology and is committed to making the subject accessible to all. His reports focus on the development of various cryptocurrency technologies.

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