April 19, 2024
Asset Managers Embrace Digital Assets
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Asset Managers Embrace Digital Assets Despite Crypto Bear Market: Amberdata Report

Institutions are displaying a bullish stance towards the crypto bear market, with a recent report by crypto data provider Amberdata in collaboration with global financial services analyst Coalition Greenwich shedding light on asset managers’ approach to digital assets. The report, titled ‘Digital Assets: Managers Fuel Data Infrastructure Needs,’ examined the strategies of sixty asset managers, primarily from the U.S., Europe, and the U.K., including hedge funds, venture capital firms, and family offices.

One standout revelation from the report is that nearly half (48%) of the surveyed asset managers currently have digital assets under management (AUM). However, the AUM figures for digital assets vary significantly among these entities. The majority fall within the lower range, with 22% managing between $1 and $10 million. An additional 19% hold between $11 and $50 million in crypto assets for their clients, while only one institution manages more than $1 billion in digital assets.

Notably, the asset managers surveyed by Amberdata are of substantial size. Around one-third reported AUM exceeding $5 billion across all asset classes, with another third managing $1–5 billion in AUM. The remaining portion held less than $1 billion in AUM across all asset classes.

Despite the lack of a clear regulatory framework, Amberdata CEO Shawn Douglass found it interesting that respondents expressed strong confidence in the U.S. supporting digital asset adoption. According to the report, 85% of respondents believed that the SEC and CFTC would offer positive opportunities despite near-term challenges. However, concerns remain among the 52% of institutions not currently involved in crypto. These concerns encompass various factors such as the absence of standardized KYC/AML technology, unclear tax policies, custody complexity for digital assets, security challenges, and blockchain performance issues.

The report also highlights institutions’ commitment to providing specialized crypto services, with one in four reporting that they currently have a dedicated role focused on digital assets—a number expected to increase by 13% over the next year. This commitment underscores the priority many institutions place on crypto products and services despite the ongoing crypto bear market.

Douglass concluded by noting that even after the collapse of FTX, most asset managers expect centralized exchanges to grow over the next five years. This suggests continued optimism and interest in the crypto market’s potential for growth among institutional players.

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