Seventy-two per cent of pension funds, wealth managers and other institutional investors expect the regulatory environment for crypto/digital to improve and become more constructive over the next two years, according to Nickel Digital Asset Management.

However, the study of 200 professional investors from across seven countries, which collectively manage around USD 329bn in assets, also found that 23 per cent expect no change in the regulatory environment, and just 7 per cent anticipate it will deteriorate.

Some 62 per cent of professional investors expect Germany and the UAE to take a huge leap forward as market leaders in the crypto/digital asset space because of their proactive stance in developing a constructive and robust framework for the crypto/digital asset sector. However, this is likely to lead to other major countries following their lead as they fear missing out – this is the view of 63 per cent of professional investors surveyed.

In terms of when professional investors believe financial regulators will agree a global framework for crypto/digital assets, 23 per cent expect it to happen this year, 29 per cent in 2023 and 28 per cent in 2024, with the remainder anticipating it will take longer.

Overall, as regulation of the crypto/digital asset market develops, 20 per cent of professional investors believe it will be a catalyst for a dramatic increase in wealth managers, pension funds and other institutional investors increasing their allocation to crypto and digital assets. A further 36 per cent believe it will lead to a slight increase in their allocation.

Nickel Digital head of business development, Henry Howell, said: “We are only at the very beginning of the digital asset sector, and the most exciting developments have yet to happen. Record inflows of venture capital in 2021, continued product innovation at the blockchain level and ongoing adoption of the largest players in traditional finance all point to growth of the already multi-trillion-dollar asset class.”

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