94% of endowments allocated crypto-related investments in 2018. This news comes as a result of a new survey published on Friday, which was conducted late last year by crypto trade publications The Trade Crypto and Global Custodian, in conjunction with blockchain security firm BitGo.
Per the survey, endowments will continue to allocate funds to crypto, despite concerns about the lack of regulation in the industry that pervade most media coverage of institutions’ relationship with crypto. Indeed, only 7% of those who responded said they expected to decrease their crypto-based holdings in the next twelve months, and 50% anticipated they would increase their allocations in crypto.
Of the 150 endowments that were surveyed, 89% were based in the United States, while the remaining 11% were based in either Canada or the United Kingdom (UK). More than half of the endowments (54%) claimed their investment came in the form of direct holding of cryptoassets, while the other 46% said they invested through a type of fund.
Managing editor at the Global Custodian and The Trade, Jonathan Watkins, commented on the findings of the survey:
“It’s fascinating to see that despite the widely-publicised concerns around regulation, custody and liquidity, endowments have been factoring crypto-related investments into their allocations, and very few are showing intentions of stepping away. All the talk over the past 18 months has been around when institutional investors will begin participating in cryptocurrency investments, but it turns out they had already arrived, in the form of endowment funds.”
In terms of what concerns the endowments had about the crypto space, they were, in order: market infrastructure, volatility, regulatory concerns, followed by liquidity. Conversely, the top three characteristics that endowments are looking for when they select crypto funds are: that they comply with regulation, have sufficient capital flow, have sufficient liquidity, offer account security.
The report also implies there is room for optimism for the future of endowments investing in crypto, quoting one respondent’s belief that crypto “is the future of investing.”