World-renowned accounting firm KPMG has published its newest insights into the finances of Canada’s institutional investors. The respondents to KPMG’s surveys managed over $500 million (CA$683 million) each, reflecting that the big money in Canada is warming to cryptoassets. Find more insights from the report below.
Cryptocurrency & Cryptoassets
Cryptocurrency rocked the world when Bitcoin, and later Ethereum, brought blockchain technology to the mainstream. At first, Bitcoin was used by enthusiasts to buy two pizzas in 2010. Its use cases were novel but few and far between. That changed once Bitcoin exploded, valued now in the tens of thousands. That first Bitcoin purchase, which was 10,000 Bitcoin at the time, is worth almost CA$700 million today.
Now more services accept legitimate cryptocurrency, mainly digital economies like e-commerce or video-streaming websites. You can also find a crypto gambling website online, where the digital currency is used similarly to casino chips. Besides convenience, the real power of cryptocurrency comes from its trust-enforcing infrastructure. That’s the blockchain, which records all transactions. It displays them in such a way that the users are anonymised, but it’s possible to see and confirm when digital assets are being sent back and forth. This allows two individuals to do business from afar, with no middleman, while keeping both of them honest.
When it comes to blockchain technology, cryptocurrency is just the first and most famous use case. A blockchain can theoretically be used to implement the same mix of transparency, anonymity, and trustworthiness into any digital system. In the early 2020s, we saw the explosion of non-fungible tokens or NFTs. While cryptocurrency is fungible, as currencies need to be, NFTs market themselves based on uniqueness.
Put simply, an NFT is a non-currency asset like art, video, music, or any other digital file. That file is then secured on the blockchain, and its access key is bought and sold. The owner of said key is the official owner, recorded on the blockchain forever. The NFT art explosion of 2021 quickly slumped, mainly due to its use cases being limited, but the tech behind NFTs is great for validating more interactive digital assets. Such digital assets may become commonplace in the future if reality-bending concepts like the metaverse or AR take off.
The KPMG Report
That brings us to the KPMG report, a way for the accounting firm to see where investors are parking their money. Released on the 24th of April 2024, the KPMG revealed that Canada embraced cryptoassets via a press release. In it, they state that 39% of Canadian organisations and institutional investors had “direct or indirect exposure to cryptoassets.” They add that this is up 8% from 2021’s report when it was just 31%.
Other insights from the report were just as illuminating. 75% of respondents owned cryptoassets (including currencies) directly. They also further broke down how respondent exposure by ETF, crypto-related public equity, or venture capital/hedge fund activities. Additionally, 42% had exposure through derivatives, meaning they owned assets that moved based on the performance of crypto.
The KPMG report was built using 65 responses. In most cases, 65 respondents wouldn’t be enough to draw any conclusions, but these were high-ticket asset managers and organisations handling hundreds of millions of dollars. As for what these results mean, KPMG Canada’s digital assets leader Kunal Bhasin speculated that it’s a debasement hedge. Following the last few years, it makes sense that investors will diversify their assets. Crypto technology is a lot more than an investment asset, but investment activity like this does lend credibility to the space and a
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