Insights into the Chinese Market: KPMG China Reports 92% of Hong Kong Survey Respondents Intend to Invest in Virtual Assets, 58% of Family Offices and High-Net-Worth Individuals Have Already Entered the Market

A recent survey by KPMG China and Aspen Digital shows that 92% of respondents in Hong Kong are interested in investing in digital assets, with 58% of family offices and high-net-worth individuals having already made such investments, and 34% planning to invest.

Furthermore, 60% of family offices and high-net-worth individuals surveyed have less than 5% of their investment portfolios in digital assets, while 54% expressed an intention to allocate between 5% and 30% to this asset category.

In recent years, the special administrative region government has actively promoted Hong Kong's development into an international digital asset hub, introducing a series of measures to foster compliant industry growth, including a new licensing system for digital asset trading platforms, and the listing of several cryptocurrency spot and futures ETFs in 2023 and 2024.

Amid these policy initiatives, surveys indicate that wealthy individuals' interest in incorporating digital assets into their investment portfolios continues to rise.

Shaohui Ma, a partner in financial services at KPMG China, noted that the market continues to see new products, and with ongoing improvements in regulatory frameworks that meet institutional investors' requirements, they are looking to invest in markets with clear regulatory frameworks.

In fact, in recent years, mainstream institutional investors have also joined the fray of investing in digital assets, bolstering the confidence of family offices and high-net-worth individuals.

Not only in Hong Kong, but KPMG also reported in late April that Canadian institutions' interest in digital assets has surged.

The consulting group's semi-annual survey on "Institutional Adoption of Crypto Assets" received 65 responses, including 31 institutional investors managing over USD 500 million in assets and 34 financial service organizations.

A report released by KPMG on April 24, 2023, revealed that 39% of Canadian institutional investors had direct or indirect exposure to crypto assets, up from 31% in the company's 2021 study.

The survey found that one-third of institutional investors allocated 10% or more of their investment portfolio to crypto assets, an increase from the report two years ago.

Kunal Bhasin, partner and head of KPMG Canada's digital asset business, pointed out that enterprises seem to be exploring investments in alternative asset categories as a hedge against depreciation and a reliable store of value, especially amid concerns about escalating inflation and rising debt.

The survey identified several reasons driving institutional investors' interest in crypto assets, including mature markets and improved custody infrastructure. Financial firms stated that increased client demand for crypto asset services is a key factor driving their expansion into this field.

In 2023, due to stringent US regulations, many cryptocurrency companies moved much of their business to Canada. Notably, Coinbase, the largest licensed crypto exchange in the US, expanded its operations to Canada's west coast, praising the country's "participatory regulatory" approach over strict enforcement measures.

Another executive at KPMG's digital asset business, Kareem Sadek, highlighted that Canada's approval of Bitcoin and Ethereum spot ETFs in February 2021 played a significant role in attracting local investors to the crypto asset category.