A new survey found that more financial service organizations are offering crypto assets in Canada amid growing crypto exposure among institutional investors. 

KPMG in Canada and the Canadian Association of Alternative Assets and Strategies (CAASA) released the survey results on Wednesday, which looked at crypto offerings and exposure in 2023 compared to 2021. 

The survey found that 50 per cent of financial services respondents indicated offering at least one type of crypto asset product or service to clients in 2023, rising from 41 per cent in 2021. Meanwhile, 39 per cent of institutional investors indicated having direct or indirect exposure to crypto assets last year, marking an increase from 31 per cent in 2021. 

• Top headlines on investing, all in one place

“Our survey findings suggest crypto assets are increasingly seen as an investible alternative asset class among such institutional investors and financial services organizations in Canada,” Kunal Bhasin, a partner and co-leader of KPMG in Canada's digital assets practice, said in a press release Wednesday. 

"Rising U.S. debt combined with increasing inflation likely provided a catalyst for the crypto rally of 2023, and it appears investors are looking for alternative asset classes that act as a debasement hedge and a reliable store of value.” 

Financial service organizations averaged two to three service offerings per respondent, the survey found, up from an average of one to two services in 2021. 

Respondents indicated the rise in offerings was an effort to meet demand from clients for crypto assets. The survey found around 80 per cent of financial service respondents pointed to demand as a major factor in expanding offerings, up from around 50 per cent in 2021. 

“Traditional financial institutions are increasingly recognizing the need to provide crypto asset services to meet customer demand,” Kareem Sadek, a co-leader of KPMG's digital assets practice, said in the release. 

Among the most common types of crypto services offered by financial service providers included crypto asset trading; custody, clearing and settlement services; and quantitative trading. 

“Even so, Canada's large financial institutions will need to become more comfortable with the unique challenges related to anti-money laundering and financial crimes that are posed by crypto assets before they offer more commercial banking services to crypto companies," Sadek said. 

Institutional investors 

According to the survey, institutional investors are using a range of strategies to gain exposure to crypto assets, such as direct ownership and investing in regulated products, including ETFs and public equities. 

"A pivotal moment for crypto assets came in January 2024, when the U.S. Securities and Exchange Commission (SEC) approved spot Bitcoin ETFs. That was considered a milestone event for many market participants,” Sadek said.

“That attracted many traditional asset managers with strong reputations to the crypto asset industry.” 

The maturing crypto market was cited as a key reason behind investing in the sector among 67 per cent of investors surveyed, up from 14 per cent in 2021. 

Methodology: 

The survey was conducted by KPMG in Canada and the Canadian Association of Alternative Assets and Strategies (CAASA). Results were derived from 65 responses, 31 of which were from institutional investors and 34 were from financial services organizations. Responses were taken from June 9, 2023 to December 1, 2023. 

Financial service organizations in the survey included asset management, capital markets, wealth management, financial advisors, commercial banking and more. 

Institutional investors included in the survey ranged from hedge funds, family offices, pension funds, private equity and venture capital firms and more.