Nomura and its digital assets subsidiary Laser Digital conducted a survey of 547 Japanese institutional investors in April. They found that 54% of investors would buy crypto assets within the next three years. However, only a quarter had a positive impression of crypto, with 52% holding neutral views.
Diversification was cited as the most significant driver for investment, with 62% of investors seeing this as a benefit. Those respondents who were more knowledgeable about crypto were more enthusiastic about the diversification potential (88%). Other motivations were the low correlation of returns to other assets, the inflation hedge and the high return potential. Two thirds see a crypto allocation of 2-5% as optimal, with 17% looking at a higher proportion.
Crypto investment bottlenecks
The research explored challenges and bottlenecks in the investing process. The top barrier is the challenge of pricing crypto, followed by counterparty risks and volatility.
It found varied responses based on investment stages. For example, those who have never considered investing see laws and regulations as massive hurdles and internally lack the information to convince decision-makers.
In contrast, those considering investing see the Basel Committee bank capital adequacy rules as a significant hurdle. The rules give cryptocurrencies the highest risk weighting of 1250%. Various types of banks comprised around 29% of the survey respondent base. From an internal perspective, those currently considering investing found the negative perceptions of crypto by decision makers is an issue or those with sign off power lack sufficient knowledge.
These three points were far greater challenges for those already investing or planning to.
Growth drivers
Drivers of investment growth include a wider array of investment products, particularly ETFs, followed by other companies investing and expanded crypto asset use cases. Over half are interested in ETFs (53%), but 31% are also considering direct investment. A similar proportion of investors are interested in staking, mining and lending. Amongst the more advanced group who are already investing or planning to, 80% were attracted to staking.
Meanwhile, in 2019 Nomura founded BOOSTRY, the developer of one of Japan’s top two largest security token issuance platforms. The following year it launched Komainu, a digital asset custody joint venture with 21shares and Ledger. It set up Swiss-based Laser Digital as its digital asset arm in 2022.
