Institutional investors are increasingly interested incrypto. (Photo: Shutterstock)

(Bloomberg) –About half of institutional investors consider digital assetsto be worthy of holding in portfolios, according to a survey commissionedby Fidelity Investments.

Fidelity, which began a custody service to hold Bitcoin for itscustomers earlier this year, is trying to gauge how pensions,family offices, hedge funds, endowments and foundations feel aboutowning cryptocurrencies as it builds out its Fidelity DigitalAssets business.

According to the survey, which questioned 441 institutionalinvestors from November to February, 72 percent prefer to buyinvestment products that hold digital assets, while 57 percentchoose to buy them directly.

“That's interesting because I'd argue that no one owns dollarsor euros in a fund,” Tom Jessop, president of Fidelity DigitalAssets, said in an interview. Survey participants said they wereconcerned about volatility, regulatory uncertainty and a lack offundamentals to use in determining the right price for Bitcoin,Ether and other digital assets. Jessop noted the survey was doneduring a bear market in which cryptocurrencies have droppedsubstantially from their highs in late 2017.

The cryptocurrency market continues to be plagued with fraud,theft and regulatory infractions. The latest case involves the NewYork attorney general accusing Bitfinex, one of the largest Bitcoinexchanges, of hiding the loss of about $850 million in client andcorporate cash.

Vancouver-based Quadriga Fintech Solutions Corp., which is goingthrough bankruptcy in Canada, owes 115,000 clients about $193million in cryptocurrencies and cash after the death of founderGerry Cotten last year. The continued black marks are likelykeeping many traditional investors away from the space for now.

Fidelity Chief Executive Officer Abigail Johnson is hoping tochange that, and has been a proponent of digital assets, settingher apart from many rivals.

Under her leadership, the firm began mining Bitcoin in 2015.She's betting Fidelity Digital Assets will appeal to Wall Street'srelatively nascent appetite for trading and safeguarding digitalcurrencies. Jessop echoed those thoughts in the interview.

“People are relying on the institutions they've done businesswith for a long time to fulfill their objectives and needs,” hesaid. “I'm not trying to throw shade on anybody else, but it's upto the clients to decide.”

The survey found 47 percent of institutional investors saiddigital assets are worth investing in, with the same percentagesaying they appreciate crypto for being innovative.

The survey, which was done with Greenwich Associates, also foundthat 46 percent of respondents like the low correlation betweencryptocurrencies and other asset classes.

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