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According to new statistics, the security of bitcoin custodial services is still one of the major barriers stopping institutional investors from purchasing cryptocurrencies for the first time.
Nickel Digital Asset Management, a crypto fund based in the United Kingdom, conducted a study of 100 wealth managers and global institutional investors to determine the top investor concerns about crypto.
Respondents from the United States, France, Germany, the United Arab Emirates, and the United Kingdom are included in the study, with a combined $275 billion in assets under administration.
The poll, which was conducted online from May to June 2021, showed that institutional investors had little faith in crypto security, with 76 percent citing concerns about the security of custodial services as one factor preventing them from investing in crypto.
The regulatory environment was also mentioned as a key barrier by respondents. Other major issues were a perceived lack of competent fund managers offering crypto investments, as well as a lack of transparency and volatility.
Institutional concerns about crypto custody and security, according to Anatoly Crachilov, co-founder and CEO of Nickel Digital, come despite the industry’s “very strong progress on that front.” Crypto service providers have been increasingly deploying sophisticated cryptographic solutions, such as distributed keys and multi-party computation vaults, while traditional financial institutions have remained cautious.
“We’re seeing Fidelity, BNY Mellon, and State Street enter the market today, bolstering market infrastructure even further. All of this boosts investor trust in the sector, resulting in ever-increasing allocations to this rapidly rising asset class,” Crachilov added.
The new poll comes after the Australian Securities Exchange issued a warning about custodial services on centralised cryptocurrency exchanges, alerting investors about cybersecurity concerns such as hacking.