Key Takeaways
- • Nickel Digital's survey of more than 200 institutional investment and wealth managers found 92% would increase digital asset allocations if traditional financial firms adopted enhanced security and custody standards, with 32% saying they were very likely to raise allocations.
- • Security and custody standards are the top barrier to larger digital asset allocations, cited by 46% of respondents as the biggest obstacle, ahead of price volatility at 28%.
- • Nearly 90% of respondents said high-profile hacks, failures, and DeFi exploits significantly affected their willingness to invest in digital assets.
- • Less than a quarter of respondents pointed to insufficient liquidity and lack of market depth as the primary barrier.
Summary
A lack of security and custody standards is the biggest barrier to increased allocations to digital assets among wealth managers and institutional investors, according to recent research from digital asset manager Nickel, as reported by Portfolio Adviser.
The survey covered more than 200 institutional investment and wealth managers. Of these, 92% said they would increase allocations to digital assets if traditional financial firms adopted enhanced security and custody standards, and 32% said they were very likely to raise allocations under those conditions. Nearly 90% said high-profile hacks, failures, and DeFi exploits had a significant impact on their willingness to invest. A further 46% named cybersecurity or hacking risks as the single biggest barrier to raising allocations.
By comparison, only 28% identified price volatility as the biggest barrier, and less than a quarter cited insufficient liquidity and lack of market depth. The findings point to counterparty and infrastructure trust, rather than market structure or price behavior, as the primary constraint on institutional adoption.
Anatoly Crachilov, CEO of Nickel Digital, said the industry has made substantial progress in recent years but still has significant work to do on security. "Digital assets still have some way to go before custody and security standards consistently match those that investors expect from traditional prime brokers and custodians," he said.
The survey covered more than 200 institutional investment and wealth managers. Of these, 92% said they would increase allocations to digital assets if traditional financial firms adopted enhanced security and custody standards, and 32% said they were very likely to raise allocations under those conditions. Nearly 90% said high-profile hacks, failures, and DeFi exploits had a significant impact on their willingness to invest. A further 46% named cybersecurity or hacking risks as the single biggest barrier to raising allocations.
By comparison, only 28% identified price volatility as the biggest barrier, and less than a quarter cited insufficient liquidity and lack of market depth. The findings point to counterparty and infrastructure trust, rather than market structure or price behavior, as the primary constraint on institutional adoption.
Anatoly Crachilov, CEO of Nickel Digital, said the industry has made substantial progress in recent years but still has significant work to do on security. "Digital assets still have some way to go before custody and security standards consistently match those that investors expect from traditional prime brokers and custodians," he said.
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