KEEP UP TO DATE WITH ALL THE IMPORTANT COVID-19 INFORMATIONCOVID-19 RESOURCE PORTAL

FANews
FANews
RELATED CATEGORIES
SUB CATEGORIES General | 

Research reveals institutional investors plan to increase their allocation to cryptoassets

21 September 2020 Evertas

New research (1) amongst institutional investors who collectively help manage $78.4 billion of assets, reveals that over the next five years 26% believe pension funds, insurers, family offices and sovereign wealth funds will ‘dramatically’ increase their level of investment in cryptocurrencies such as Bitcoin and cryptoassets in general.

A further 64% anticipate a slight rise. The corresponding figure for hedge funds is 32% and 48% respectively.

The findings are from Evertas, the world’s first cryptoasset insurance company, which focuses on covering institutional holders of cryptoassets including exchanges, custodians, traditional financial institutions, funds, family offices and ultra-high net worth individuals.

When asked why they believe institutional investors will increase their exposure to cryptocurrencies and cryptoassets, 84% of the survey respondents said it was because they expect the regulatory infrastructure for the market to improve, and this is followed by 80% who say it is because the crypto market will become much bigger, providing greater liquidity. Three in four (76%) say it is because they expect more mainstream fund managers and financial services companies to enter this market, and there will be more funds and investment vehicles in this area to choose from.

However, Evertas’ findings reveal that institutional investors still have some substantial concerns about investing in cryptoassets.  Some 56% said they are ‘very concerned’ about the lack of insurance cover for cryptoassets, while 54% were ‘very concerned’ about the working practices and compliance procedures of companies working in the sector who supply services to institutional investors. Other concerns include the quality of custodial services in this market, the availability and quality of trading desks, and reporting facilities. 

J Gdanski, CEO and Founder of Evertas, said:“Our research shows that institutional investors are enthusiastic about increasing their exposure to cryptocurrencies and cryptoassets in general, but there are clearly many issues regarding the infrastructure that supports these markets that still concerns them. These clearly need to be addressed if the full potential of investment from institutional investors in cryptoassets is to be realised.”

Raymond Zenkich, President and COO, Evertas said: “A lack of adequate insurance for the cryptoassets market is clearly top of the list of concerns for many institutional investors, which is perhaps not surprising when insurers are only providing capacity of around $2 billion for a market that is worth between $250 billion and $300 million. We are working closely with the insurance community to address this issue.”

Earlier this year, Evertas completed a Seed Stage funding round and raised $2.8?million. The funding round was led by Morgan Creek, who were joined by Plug n Play, Kailash Ventures, RenGen, Vy Capital and Wavemaker Genesis. Mark Yusko, Founder, CEO and Chief Investment Officer of Morgan Creek Capital Management & Managing Partner of Morgan Creek Digital Assets, joined Evertas’ Board of Directors.

It also received its licence from the Bermuda Monetary Authority to start operating from the jurisdiction. It operates as a ‘Class 3A’ insurer. *

Founded in 2017, Evertas has a world-leading team led by an experienced group of executives including , a blockchain team leader at Bank of New York, and a blockchain industry insurance expert. The founders have over 40 years of combined experience in the insurance sector, and more than ten in the crypto and blockchain markets.

1. Evertas commissioned the market research company Pureprofile to interview 50 institutional investors who collectively help manage $78.4 billion of assets. 25 were based in the UK and 25 in the USA. Interviews were conducted online during July 2020.
2. CLASS 3A: Small commercial insurers whose percentage of unrelated business represents 50% or more of net premiums written or net loss and loss expense provisions and where the unrelated business net premiums are less than $50 million. Class 3A insurers are required to maintain minimum capital and surplus of $1 million.

Quick Polls

QUESTION

Which of the following factors will make the biggest difference to the profitability of a short-term insurance brokerage over the next five years?

ANSWER

Implementing tech-backed distribution platforms
Diversifying into specialist risk management & risk advisory services
Renewing focus on the broker-client relationships
fanews magazine
FAnews October 2020 Get the latest issue of FAnews

This month's headlines

Transformation trends - Tough commission procurement rule could dent insurers’ B-BBEE scorecards
Business interruption losses… the uninsurable
Are annuities tailor-made for today’s investors?
Reframing clients’ notions about retirement
In search of sustainable drought solutions
From risk to resilience - What the latest mindshift means for insurers
Subscribe now