94% of endowments have been allocating to crypto-related investments
throughout 2018, a new survey published on April 12 reveals. The study was conducted in Q4 2018 by trade publications Global Custodian and The Trade Crypto, in partnership with blockchain security firm BitGo. Out of 150 surveyed endowments, 89% of the respondents were reportedly based in the United States, with the rest either in the United Kingdom or Canada.
The survey indicated that despite widely-reported concerns around regulation, custody and liquidity, endowments will continue to allocate investments to the new asset class — with only 7% of respondents saying they anticipated any decrease in their allocations over the next year. Jonathan Watkins, managing editor at Global Custodian and The Trade, remarked on the results of the survey,
“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.”
The survey reportedly revealed that 54% of respondents were directly investing in crypto assets, with 46% investing via various kinds of funds. Over the next 12 months, 50% revealed they expect to increase their crypto investments, with 45% anticipating their allocations will remain at their current levels.
According to the survey, the top three characteristics that endowments are seeking when they select crypto funds are that they comply with robust regulation, have sufficient capital flow and liquidity and offer account security. The Trade suggests cautious optimism is an apt overall summary of endowment sentiment in regard to the nascent asset class, citing one respondent’s belief that crypto “is the future of investing,” and others’ characterizations of the process as “a very wild ride” and “hair-raising.” As reported, this February, the University of Michigan’s $12 billion endowment unveiled plans to bolster its investment in a crypto fund managed by U.S. venture capital firm Andreessen Horowitz.
Details of reported crypto fund investments from Ivy League titans Yale and Harvard surfaced in fall 2018 — the latter of whose ~$39.2 billion endowment for the 2018 fiscal year was the largest of any university endowment globally. Crypto investment claims have also been made for Stanford University, Dartmouth College, the Massachusetts Institute of Technology and the University of North Carolina. As reported this month, Harvard’s endowment is set to become a direct investor in a planned $50 million token sale from decentralized computing network Blockstack. If approved, the sale would be the industry’s first Securities and Exchanges Commission-qualified offering.
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