KPMG, one of the Big Four accounting firms, reveals that investors are increasingly embracing cryptocurrencies as a hedge against the devaluation of fiat currencies by central banks. According to a recent report, KPMG examines the Canadian market and discloses that by 2023, half of the financial service providers surveyed in the country will offer crypto asset services, up from 41% in 2021. The study also uncovers that 39% of Canadian institutional investors had exposure to cryptocurrencies in 2023, a rise from 31% in 2021.

Kareem Sadek, the Emerging Technology Risk leader and co-leader of KPMG’s Digital Assets practice, explains that Canadian institutional investors are growing more comfortable with cryptocurrencies due to two significant factors. “Canada has played a pioneering role in establishing a regulatory environment that encourages innovation in crypto assets, including the approval of the first Bitcoin and Ethereum exchange-traded funds and the allowance of sophisticated strategies involving derivatives and Ethereum staking. These actions, combined with the increasing prices of crypto assets, are likely reasons why institutional investors are increasingly attracted to the crypto space.”

Kunal Bhasin, partner and co-leader of KPMG in Canada’s Digital Assets practice, adds that institutions in Canada are also considering crypto assets as a way to safeguard themselves against the devaluation of national currencies. “The rising US debt, coupled with escalating inflation, likely served as a catalyst for the crypto rally of 2023, and it seems that investors are searching for alternative asset classes that can serve as a hedge against devaluation and a reliable store of value. Our survey findings indicate that crypto assets are increasingly viewed as a viable alternative asset class among institutional investors and financial services organizations in Canada.”

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