The Canadian financial landscape experienced a notable surge in cryptocurrency adoption in 2023, as revealed by a recent survey conducted by KPMG in Canada.
- Financial firms offering crypto products increased by 22%.
- Institutional investors integrating crypto into portfolios rose by 26%.
- 50% of financial services respondents now provide cryptoasset services.
- Direct ownership of digital assets doubled, with 75% of investors holding them.
The Canadian financial sector experienced a significant increase in cryptocurrency adoption in 2023, according to a recent survey conducted by KPMG in Canada. The survey findings indicate a noteworthy rise in both financial firms offering crypto products and institutional investors incorporating cryptocurrencies into their portfolios.
Rapid Growth in Crypto Services
The survey revealed a 22% increase in financial firms providing crypto products and services since 2021. Moreover, institutional investors integrating cryptocurrencies into their investment strategies surged by 26% during the same period. Specifically, the provision of crypto trading, custody, clearing, and settlement services saw substantial growth, with 52% of firms now offering trading services compared to none reported previously.
Increasing Investor Exposure to Crypto
The survey noted a considerable uptick in investor exposure to cryptocurrencies, with 39% of respondents reporting either direct or indirect exposure, marking an increase from 31% in 2021. Notably, direct ownership of digital assets more than doubled, with 75% of investors now holding these assets compared to 29% two years ago.
Driving Factors Behind the Surge
Kunal Bhasin, partner and co-leader of KPMG in Canada’s Digital Assets practice, attributed the surge in crypto adoption to various factors. He highlighted growing concerns over US debt and inflation, which have prompted investors to view cryptocurrencies as a protective hedge and a reliable store of value.
Regulatory advancements were cited by Kareem Sadek, Emerging Technology Risk leader and co-leader of the practice, as a key driver of the resurgence. Canada’s approval of the first Bitcoin and Ethereum ETFs, along with support for innovative strategies like derivatives and Ethereum staking, has positioned the country as a frontrunner in the crypto market.
Diversified Investment Strategies
The survey also indicated a shift towards more diversified investment strategies in the financial services sector. Firms are now offering an average of two to three crypto services, up from one to two in 2021. This expansion is primarily driven by increasing client demand for crypto services, which now influences 80% of financial services firms compared to 50% two years ago.
Institutional investors are further diversifying their portfolios, with one-third now allocating at least 10% to crypto, up from one-fifth in 2021. Enhanced custody solutions and the maturation of the market have encouraged 67% of investors to initiate their first crypto investments, marking a significant rise from 14% in the previous survey.