Majority set to increase DeFi investment engagement, Nickel Digital research says
22 August 2023 UK
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According to recent research from hedge fund manager Nickel Digital Asset Management, 81 per cent of institutional investors and wealth managers believe that decentralised finance (DeFi) investments are becoming more attractive. A further 23 per cent reported that such investments are becoming much more attractive.
Pension funds and wealth managers are expected to increase their DeFi investments the most dramatically, while sovereign wealth funds, hedge funds and family offices are projected to increase their investments to a lesser extent.
Factors continuing to prevent engagement from major institutional investors included issues around know-your-customer and anti-money laundering operations, along with concerns that liquidity levels are insufficient.
Additionally, 44 per cent of those polled highlighted the need for regulatory clarity in the space before they engage with it. Technology concerns, a lack of safe custody solutions and tax issues were also raised as reasons that firms are not yet investing in the space.
The survey was conducted in July 2023, and consisted of 200 institutional investors and wealth managers from the US, UK, Germany, Singapore, Switzerland, Brazil and the UAE. Collectively, participants hold approximately US $3.5 trillion in assets under management.
Commenting on the findings, Anatoly Crachilov, CEO and founding partner at Nickel Digital, says: “DeFi solutions demonstrated the resilience of decentralised applications during last year’s ‘mass extinction’ of centralised entities. The market now increasingly recognises DeFi’s value proposition and the growth opportunities over the coming years.
“However, there remain barriers to wider engagement in DeFi and these concerns will need to be addressed for institutions to engage on a broader scale. Nonetheless, these can be resolved. Nickel has already taken steps to mitigate these risks in our operations and it would be great to see them gain wider adoption in the sector.”
Pension funds and wealth managers are expected to increase their DeFi investments the most dramatically, while sovereign wealth funds, hedge funds and family offices are projected to increase their investments to a lesser extent.
Factors continuing to prevent engagement from major institutional investors included issues around know-your-customer and anti-money laundering operations, along with concerns that liquidity levels are insufficient.
Additionally, 44 per cent of those polled highlighted the need for regulatory clarity in the space before they engage with it. Technology concerns, a lack of safe custody solutions and tax issues were also raised as reasons that firms are not yet investing in the space.
The survey was conducted in July 2023, and consisted of 200 institutional investors and wealth managers from the US, UK, Germany, Singapore, Switzerland, Brazil and the UAE. Collectively, participants hold approximately US $3.5 trillion in assets under management.
Commenting on the findings, Anatoly Crachilov, CEO and founding partner at Nickel Digital, says: “DeFi solutions demonstrated the resilience of decentralised applications during last year’s ‘mass extinction’ of centralised entities. The market now increasingly recognises DeFi’s value proposition and the growth opportunities over the coming years.
“However, there remain barriers to wider engagement in DeFi and these concerns will need to be addressed for institutions to engage on a broader scale. Nonetheless, these can be resolved. Nickel has already taken steps to mitigate these risks in our operations and it would be great to see them gain wider adoption in the sector.”
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