Investors want crypto, but not without TradFi backing: Nomura survey

As the world of cryptocurrencies continues to captivate professional investors, a recent survey conducted by Nomura’s digital asset arm, Laser Digital, unveils a crucial prerequisite for their entry into the market. Institutional investors are eager to embrace digital assets but emphasize the need for support from established financial institutions. This article delves into the survey’s key findings and sheds light on the sentiments of professional investors toward crypto investments.

Regulatory Uncertainty Dampens Institutional Interest 

The survey, known as the Laser Digital Investor Survey, conducted in April, highlights a stagnation in institutional investor interest in cryptocurrencies. This tepid response is primarily attributed to the increasing regulatory uncertainty in the United States, which has initiated a regulatory crackdown on the broader digital asset industry. To instill confidence in professional investors, regulatory clarity is imperative.

Backing of Traditional Financial Institutions 

A staggering 90% of the polled professional investors emphasized the significance of having the backing of a “large traditional financial institution” before considering investments in crypto assets or funds. They perceive this backing as a crucial factor in mitigating risks and ensuring stability within the volatile crypto market. Such support would bolster investor confidence and potentially drive greater institutional participation.

Digital Assets: A Diversification Opportunity 

Despite their cautious approach, 96% of the professional investors surveyed acknowledged the potential of digital assets to diversify investment portfolios. They view cryptocurrencies as an opportunity to augment traditional asset classes like fixed income, cash, equities, and commodities. This recognition of crypto’s diversification benefits serves as a testament to its growing acceptance among seasoned investors.

Anticipated Increase in Institutional Investment

The recent BlackRock spot ETF application has sparked predictions of a surge in institutional investment in the crypto space. Industry observers anticipate that the involvement of renowned financial institutions could inspire greater confidence among professional investors, potentially leading to increased allocation of institutional capital into digital assets.

Optimism Surrounding Bitcoin and Ethereum

Looking ahead, the survey reveals that 82% of the professional investors interviewed hold an optimistic view of the crypto asset class over the next 12 months. Bitcoin, with a price of $25,530, and Ethereum (ETH) emerged as the favored investment options, with nearly half of the respondents considering them foundational to the Web3 economy and long-lasting sources of investment opportunities.

Regulatory Constraints and Investor Hesitation

While institutional investors acknowledge the potential of digital assets, around three-quarters of those surveyed expressed concerns about legal or regulatory restrictions. These apprehensions may hinder their firms or clients from investing in crypto-related funds or products. Ongoing efforts by global regulators to establish comprehensive frameworks for this emerging asset class may help alleviate investor hesitation and facilitate increased institutional participation.

Nomura’s Laser Digital Investor Survey provides valuable insights into the sentiments of professional investors regarding cryptocurrencies. Despite the regulatory uncertainties and concerns expressed by institutional investors, the survey showcases their recognition of the diversification benefits offered by digital assets. With the support of traditional financial institutions and regulatory clarity, the crypto market has the potential to witness a significant influx of institutional capital, paving the way for a more robust and inclusive investment landscape.