A report dated May 2nd 2019 from Fidelity Investments revealed detailed survey findings concerning institutional investor interest in digital assets. According to the results, more than half of survey participants see a place for digital assets in investment portfolios.
Institutional Investor Interest in Digital Assets Explained
Fidelity has been actively engaged in the digital asset space for quite some time.
They started mining Bitcoin back in 2015. Near the end of 2018 they announced Fidelity Digital Assets, which went live in March 2019.
Apparently they’ve also been surveying institutional investors about digital asset interest. The survey results shed some light as to why Fidelity has had such a history with digital assets— especially when compared to the typically hesitant investment giants.
According to the findings, institutional investors certainly see a place for digital assets in investment portfolios. In fact, Fidelity says institutional investors are “overwhelmingly favorable about the appealing characteristics of digital assets”.
Almost half of all respondents acknowledge and appreciate that digital assets feature an innovative technology. 22% of those surveyed have already had exposure to digital assets, with the majority of investments having been made within the last three years. 40% said they are open to future investments in digital assets within the next five years.
The primary reason for their appeal, according to the survey, is a low correlation to other assets. 32% see digital assets as part of an alternative asset class, while 15% recognize digital assets as an independent asset class.
Why are Institutional Investors Now Interested in Digital Assets?
The world of digital assets has recently slowed down as a result of two primary factors: a bear market and increased regulatory enforcement.
Governing bodies such as the US Securities and Exchange Commission (SEC) as well as the CFTC have entered the space, without any signs of leaving.
SEC Chairman Jay Clayton has publicly stated how nearly every Initial Coin Offering (ICO) he has seen, constitutes a securities offering. The majority of blockchain-based tokens must therefore incorporate the SEC’s existing securities laws.
As a result, many companies looking to utilize the benefits of blockchain technology have left the ICO behind, and turned to the Security Token Offering (STO) as a safe alternative.
The result has been the emergence of security tokens, a digital asset with clear regulatory requirements.
STOs saw a 130% increase in Q1 2019, while ICOs currently raise 58 times less than they did at this time last year.
The regulatory clarity found in security tokens could be precisely what institutional investors need in order to enter the digital asset space.
What do you think about the survey findings from Fidelity Investments? Will the regulatory safety found in security tokens bring institutional investors into the digital asset realm? Let us know what you think in the comments section below.
Image courtesy of Fidelity.