Research // 2021

DACH Digital Investments Survey 2021

Investment funds and their approach to digital assets and decentralized finance solutions — Germany, Austria, Switzerland

  • 46% are interested in digital assets 
  • 4% currently invest or include digital assets in their portfolio
  • 7% are considering investing in the digital assets market in the course of 2021
  • 86% fears the regulatory uncertainty
  • 14% are considering interacting with the DeFi solutions
DACH Digital Investments Survey 2021

The study showed that 46% of investment funds are interested in digital assets and are ready to explore the digital asset market. Within three years, it is possible to expect an inflow from $100 to $657 billion into the digital asset market only from the DACH region.

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In recent years, we have seen a gradual disappearance of barriers to digital assets adoption

The laws expand the legal framework and create the foundation for infrastructure development by innovative market participants, while the mindset of the end users and customers is tuned to digital assets and CBDCs.

The remaining step is to structure the accumulated knowledge of the expert community and to identify the best practices for digital assets integration into everyday life. We believe that this research makes a feasible contribution and proves that the financial world has long gone beyond traditional banking services.

Ruslan Yusufov
Managing Partner, MINDSMITH

Executive Summary

1. DACH-focused funds are at an early stage of interest in digital assets, but adoption is on the way

Around 88% of DACH-focused funds are not currently investing in digital assets. Nevertheless, taking into account the conservative stance of the DACH-focused funds, the achieved 4% looks like a notable milestone.

2. 46% of DACH-focused funds are interested in investing in digital assets, 7% are planning to invest by the end of 2021

Almost half (46%) of DACH-focused funds are interested in one way or another in digital assets and are ready to study the issue. The development of the DACH investment landscape will largely depend on the results of the early adopters’ investments.

Talking about early adopters, 7% of respondents are currently at a late planning stage and are considering investing in the digital assets market in the course of 2021.

New regulations and introduction of CBDCs and Digital Euro will accelerate the adoption. However, as the financial industry is highly regulated, the degree of freedom will depend on the compliance requirements.

3. On the horizon of three years, it is possible to expect an inflow from $100 to $657 billion into the digital asset market only by the DACH region.

In order to show the potential of the numbers, there are currently about 1.2 trillion euros (1.45 trillion US dollars) invested in Spezialfonds with fixed investment conditions. Taking into account that about 46% of respondents are more or less interested in investing in digital assets, the potential investment volume in the next three years could reach approximately 552 billion euros (657 billion US dollars).

Even if analyzed by conservative estimates, 7% of respondents are at a late planning stage, which means that by the end of 2021, investments in digital assets of up to 84 billion euros (100 billion US dollars) can be expected.

4. Regulatory uncertainty, lack of understanding and infrastructure are major barriers to investment.

Regulatory uncertainty has become a key barrier to investment in digital assets for the majority (86%) of DACH-focused funds. However, it is at the current moment that the market is witnessing significant progress in this area.

Regarding the lack of service providers and the availability of infrastructure, which became a barrier for 57% of respondents, we have also seen significant progress on the part of regulators recently. The survey showed that liquidity, volatility, price levels and lack of traditional products are not worth the trouble yet for respondents.

Thus, the lack of understanding of digital assets, which has become a barrier for almost 60% of DACH-focused funds, will become one of the key obstacles to market development in the near future. And as the experience of popularizing cryptocurrencies has shown, this drawback is largely solved in the process of gaining experience by the early adopters.

5. Investors are curious about the deсentralized finance (DeFi) industry, which opens up a window of opportunity at the intersection of blockchain and CBDCs.

While up to 14% of respondents are considering interacting with the DeFi solutions, one of the most impressive scenarios for the development of DACH-focused funds’ investments in digital assets is the potential for investors to interact with the DeFi solutions.

Now the big question is: what stablecoins will act as a basis for the regulated DeFi ecosystem? Chances are high that digital in addition to digital dollars, digital yuan, digital euro and other CBDCs will do the job.

We do anticipate that the DeFi and digital assets sector will see massive inflow of capital

New projects are being launched both in the frontier and the well established and regulated markets, and investments are moving into the sector due to higher returns. But despite efforts, many obstacles are to be overcome and multiple questions need to be answered: legal and compliance, technology and security, product fitting and market positioning, and so far expertise on the market remains pretty scarce with some notable exclusions.

Vsevolod Michalevsky

Vsevolod Michalevsky
CEO, OnGrid Systems

Authors

Ruslan Yusufov
Managing Partner, MINDSMITH

Vsevolod Michalevsky

Vsevolod Michalevsky
CEO, OnGrid Systems

Глеб Борисов, MINDSMITH

Gleb Borisov
Chief Analyst, MINDSMITH

Prof. PhD. Sergio Luis Náñez Alonso
DEKIS Research Group, Department of Economics, Catholic University of Ávila

Experts

We are extremely grateful to our experts for their time and efforts.

Viacheslav Tsurka

Viacheslav Tsurka
Managing Director, TigerTrade

Kirill Varlamov

Kirill Varlamov
CTO, OnGrid Systems

Daria Nosova

Daria Nosova
Partner, Head of FinTech Practice, O2 Consulting

Prof. PhD. Javier Jorge Vázquez
DEKIS Research Group, Department of Economics, Catholic University of Ávila

Prof. PhD. Miguel Ángel Echarte Fernández
DEKIS Research Group, Department of Economics, Catholic University of Ávila

Prof. PhD. Ricardo Francisco Reier Forradellas
DEKIS Research Group, Department of Economics, Catholic University of Ávila

Gonzalo Wandosell Fernández de Bobadilla

Prof. PhD. Gonzalo Wandosell Fernández de Bobadilla
Research and teaching Dean of the Faculty of Business and Law, Universidad Católica de Murcia (UCAM)

MINDSMITH is an independent tech think-tank focused on blockchain technology. The company studies the impact of high technologies on business, government and society, and is engaged in consulting and educational projects. MINDSMITH’s analytics is recognized in Russia and globally. The company is a member of specialized Russian and international associations, and working groups dedicated to blockchain and central bank digital currencies.

https://mindsmith.io/

OnGrid Systems is a leading blockchain developer of infrastructure solutions for CBDCs, Decentralized Finance (DeFi) and DAO. The company provides cloud computing services’ consulting, audit and distributed ledger technologies training.

https://ongrid.pro/

TIGER.TRADE is a groundbreaking platform, designed to help people trade and analyse financial markets. Developed to streamline the process, Tiger.Trade has already been chosen by 100,000 customers across the world – and currently has a monthly trade volume of over 3 billion dollars.

The platform provides a simple and user-friendly way to visualise the market data, with 30+ components for cluster analysis, a fully-customisable dashboard and support and many more features. We are giving our customers control; so they can make the best decisions and trade effectively on the market.

https://tiger.trade/

Digital Economy & Knowledge and Information Society (DEKIS) is an interdisciplinary research group of the Catholic University of Ávila (Spain). Its main objective is research of the digital society from a perspective of comprehensive analysis of the phenomenon, including new models of production and economic activities based on the exploitation of the potential of information and communication technologies (ICT),  as well as new challenges and economic implications. The study of the central banks digital currencies  and the digitalization of the monetary system are some of the group’s main lines of research.

https://www.ucavila.es/

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Contact us for more information: info@mindsmith.io

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