Nickel: Crypto and digital asset fund launch rush is coming

3 oktober 2024

Bitcoin

Institutional investors and wealth managers are expecting a surge in new digital asset funds this year as traditional financial institutions increasingly look to the sector, new global researchby London-based Nickel Digital Asset Management (Nickel) shows.

Around 70% questioned predict a rise in digital asset focused fund launches in the next 12 months compared with the last 12 months with one in seven (14%) forecasting dramatic growth, the study with organisations invested in the digital assets sector found.

The growth in fund launches will be accompanied by growing engagement in the digital assets sectors by traditional financial institutions, Nickel’s research with institutional investors and wealth managers in the US, UK, Germany, Switzerland, Singapore, Brazil and the United Arab Emirates who collectively manage around $1.7 trillion in assets, shows.

Up to 93% questioned believe the number of traditional firms launching funds in the sector will increase over the next three years with 38% predicting a dramatic increase. A key factor behind the trend is the success of BlackRock’s first tokenised fund (BUIDL) launched in March this year on the Ethereum network. Currently its AUM is around $500 million but 95% of investors questioned believe it will hold around $10 billion by the end of 2025. It offers a stable value of $1 per token and pays accruing interest through the distribution of additional tokens. As it largely holds short term US Treasuries the counterparty risk is mitigated and investors can earn yield by holding a token which is linked one to one to the US dollar.

The study found 85% of investors say BUIDL is appealing to their organisation as an alternative to other stablecoins while another 12% said it would have to be accessible to a wider investor audience beyond institutions only.

Around 1 in 20 (5%) said they were already invested in tokenised funds such as BUIDL while another 13% said they expected to be invested in tokenised funds within 12 months. Almost all (99%) said they are or will be invested in similar funds within four years.