According to a recent publication, the Canadian financial sector witnessed a significant increase in cryptocurrency adoption in 2023 questionnaire from KPMG in Canada.
Financial companies offering crypto products and services are up 22% from 2021, while institutional investors who have incorporated crypto into their portfolios are up 26% over the same period.
Revival
Financial services: 50% of respondents now offer at least one type of crypto asset service, up from 41% in 2021. Crypto trading, custody, clearing and settlement services saw substantial growth, with 52% of firms now offers trading services, an increase from none reported in the previous survey.
Meanwhile, 39% reported direct or indirect exposure to crypto, up from 31% in 2021. Notably, direct ownership of digital assets has more than doubled, with 75% of investors now owning these assets, compared by 29% two years ago.
Kunal Bhasin, partner and co-leader of KPMG in the Canadian Digital Assets practice, commented:
“After the setbacks of previous years, including market instability and high-profile fraud, 2023 has become a year of strong recovery and confidence in crypto assets. Growing U.S. debt and inflation have driven investors toward cryptocurrencies as a protective hedge and reliable store of value.”
Kareem Sadek, leader of Emerging Technology Risk and co-leader of the practice, cited regulatory improvements as a key driver of the revival. He said:
“Canada has established itself as a leader in the crypto market by approving the first Bitcoin and Ethereum ETFs and supporting innovative strategies such as derivatives and Ethereum staking.”
Outlook
The research also revealed a shift towards more diversified investment strategies in the financial sector. The average number of services offered per company has increased from one to two to two to three in 2021.
The expansion is largely driven by rising customer demand for crypto services, which now influences 80% of financial services firms – up from 50% two years ago. Institutional investors are further diversifying their portfolios, with a third now investing at least 10% in crypto, up from a fifth in 2021.
Market maturation and improved custody solutions have driven 67% of investors to initiate their first crypto investments, a significant increase from 14% in the previous survey.
According to Sadek, the approval of an Ethereum ETF in 2024 will continue to drive institutional interest and investment. He said:
“The recent approval of spot Bitcoin ETFs by the US SEC in January 2024 marked a pivotal moment for the sector, attracting established asset managers to the sector.”