With investors looking to increase their asset allocation to crypto assets, the ability of regulators to keep up with minimising risk for participants is becoming increasingly important.
There is also a lack of adequate capacity in the insurance market (capacity is approximately $2 billion for a market that is worth up to $300 billion) which will need to catch up before institutional investors can ramp up their exposure.
It's clear that crypto assets are here to stay but both the regulators and insurance industry will need to catch up before institutional investors can make serious asset allocations to this sector. In the meantime, due diligence will be even more important - an area where we at Boodle Hatfield can help to minimise risk.
Pension funds, insurers, family offices and sovereign wealth funds will “dramatically” increase their allocations to cryptocurrencies over the next five years.