Canadian Financial Sector Sees Surge in Crypto Adoption in 2023: KPMG Survey
The Canadian financial sector is experiencing a crypto revolution, with a recent survey by KPMG in Canada revealing a significant uptick in crypto adoption in 2023. According to the survey, financial firms offering crypto products and services increased by 22% from 2021, while institutional investors incorporating crypto into their portfolios rose by 26% during the same period.
The survey highlighted a resurgence in the financial services sector, with 50% of respondents now providing at least one type of cryptoasset service, up from 41% in 2021. Crypto trading, custody, clearing, and settlement services saw substantial growth, with 52% of firms now offering trading services, a stark increase from none reported in the previous survey.
Kunal Bhasin, partner and co-leader of KPMG in Canada’s Digital Assets practice, noted that 2023 has emerged as a year of strong recovery and confidence in cryptoassets. He attributed this resurgence to growing concerns over US debt and inflation, which have driven investors towards cryptocurrencies as a protective hedge and a dependable store of value.
Regulatory advancements were also cited as a key driver of the crypto resurgence in Canada. Kareem Sadek, Emerging Technology Risk leader and co-leader of the practice, highlighted Canada’s approval of the first Bitcoin and Ethereum ETFs, as well as support for innovative strategies like derivatives and Ethereum staking.
Looking ahead, the survey indicated a shift towards more diversified investment strategies in the financial services sector. The average number of services offered per firm increased to two or three from one to two in 2021, driven by rising client demand for crypto services.
Institutional investors are also diversifying their portfolios further, with one-third now allocating at least 10% to crypto, up from one-fifth in 2021. The maturation of the market and enhanced custody solutions have encouraged 67% of investors to initiate their first crypto investments, a significant rise from 14% in the previous survey.
Sadek predicts that the approval of an Ethereum ETF will continue to drive institutional interest and investment in 2024. He believes that the recent approval of spot Bitcoin ETFs by the US SEC in January 2024 marked a pivotal moment for the industry, attracting established asset managers to the sector.
