Institutional Investors and Wealth Managers Focus on Tokenisation and DeFi
- Three Out of Four Expect Tokenisation Trend to Grow and 81% Expect DeFi to Have an Impact on Their Business
- More Than Four Out of Five (81%) Expect DeFi to Have an Impact on the Way Traditional Finance Firms Do Business
- but Research Shows That Concerns Persist About Traditional Finance Engaging Fully With DeFi
April 4, 2024 (Investorideas.com Newswire) New global research (1) by London-based Nickel Digital Asset Management (Nickel), Europe's leading regulated and award-winning, regulated digital assets hedge fund manager founded by alumni of Bankers Trust, Goldman Sachs and JPMorgan, shows institutional investors and wealth managers are increasingly focusing on the opportunities from tokenisation and decentralised finance solutions (DeFI).
Around three-quarters (75%) are predicting that tokenisation of investment funds and asset classes will increasingly be adopted by fund managers over the next five years with 14% forecasting dramatic growth in its adoption over the period.
The study with institutional investors and wealth managers in the US, UK, Germany, Switzerland, Singapore, Brazil and the United Arab Emirates who collectively manage around $816 billion in assets shows similar strong predictions about the impact of DeFi on traditional finance institutions.
More than four out of five (81%) expect DeFi to have an impact on the way traditional finance firms do business with 15% expecting a significant impact.
However, the study found some wariness about the adoption of DeFi by institutional investors and wealth managers themselves with 62% citing KYC and AML concerns as a major barrier to institutional engagement with DeFi. Nearly half (47%) point to technology risks, while 46% highlight tax concerns and 45% say insufficient liquidity in DeFi investments makes it difficult to have a material impact.
Around 36% say more regulatory clarity on DeFi is needed for institutional investors to engage, while 31% point to a lack of safe custody solutions, and one in five (18%) admit they do not have the specialised talent to enable them to engage.
Anatoly Crachilov, CEO and Founding Partner at Nickel Digital, said: "Tokenisation and DeFi investments are increasingly on the investors' radars and the research shows that the interest is only likely to grow.
"Nervousness about fully engaging is understandable as the industry is still in its infancy, but this leaves huge benefits to institutions who are willing to be early adopters."
Footnotes
(1) Nickel Digital commissioned the market research company Pureprofile to interview 200 institutional investors and wealth managers across the US, UK, Germany, Singapore, Switzerland, Brazil and the UAE in January 2024.
About Nickel Digital Asset Management
Nickel Digital Asset Management (www.nickel.digital) is a London-based FCA-authorised and CFTC-registered investment manager that offers a range of digital asset strategy solutions for institutional investors. Its mission is to provide a gateway for traditional investors into the digital assets market across a broad range of risk profiles.
The firm pursues a range of systematic strategies dedicated to the digital assets market, with its flagship multi-strategy non-directional fund focusing on alpha generation.
Nickel is led by a senior team of traders and investment professionals of experience gained in major Wall Street banks, such as Bankers Trust, Goldman Sachs, JPMorgan, Morgan Stanley, as well as global hedge funds.
Risk management is the core of Nickel's approach to investment management. This was evidenced in March 2020, May 2021 when Nickel preserved the value of investor capital and delivered positive return at the time of market implosion. Nickel was named by Opalesque, the hedge fund advisory firm, as being amongst the top 2% of global asset managers "who delivered during the meltdown".
Nickel Digital has won a number of industry awards since its inception.
Among others, there are HFM EuroHedge Emerging Manager Awards (2020), HFM Quant Performance Award (2021), Best 12-Month Risk-Adjusted Performance by Hedgeweek Digital Asset Awards (2022), Best Digital Asset Manager Europe 2022 by PAN Finance (2022), and two 2023 Hedgeweek awards for best sustained risk-adjusted returns over 12 and 36 months.
Nickel Digital Asset Management Ltd is authorised and regulated by the UK's Financial Conduct Authority ("FCA"), registered with the Commodity Futures Trading Commission ("CFTC") and is a member of National Futures Association ("NFA")
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