Crypto investors want more disclosures similar to those that exist in traditional financial investments, according to a new report from financial consultancy firm Broadridge.
The survey of 2,000 market participants from the U.S., the UK and Canada found that a large majority of respondents want more information about the digital assets they invest in, including regular risk and security updates of the project, information about who else holds assets within the network, the financial overview of the network, and governance of it. A majority of respondents said they wanted those disclosures on a quarterly or monthly basis, with some variance depending on the information.
Those disclosures, which parallel what public companies provide, ranked ahead of more crypto-centric information like tokenomics of the network as information market participants said they want. The report found that “factors like tokenomics and perspective of the core team were viewed by investors across all three countries as relatively unimportant as compared to other factors like the financial overview, risks, and management.”
“Perhaps the most striking feature of the results is that the more crypto-specific elements of crypto-related investment tend to be the data elements investors prioritize the least. In other words, the issues with the most overlap with familiar traditional financial disclosure concepts — financial information, risk factors, management — are, not surprisingly, emphasized by investors and prospective investors of crypto assets,” the report adds.
Longer-term view leads the way
Most participants – 65% – viewed crypto assets as a long-term investment, while over 40% were interested in frequent trading (participants could select multiple options). Less than one in five respondents said they use digital assets for applications. Unsurprisingly bitcoin, the original cryptocurrency and largest by market capitalization, was the most popular investment. Over 70% of respondents said they held the digital currency.
In the U.S., the country with the largest sample of participants in the survey, 50% of respondents said they wanted monthly or quarterly updates, while another 27% said they wanted information updates “as changes occur.” Respondents in Canada and the UK largely agreed, with slightly fewer saying they wanted quarterly or monthly updates, and approximately the same number saying they wanted updates on projects as changes occur.
Increased disclosures are at the center of the U.S. Securities and Exchange Commission’s belief that most digital assets are securities, requiring financial disclosures and prospectuses for investors. Token issuers and exchanges have argued that the current rules, which exist largely to provide regular disclosures to investors, are too onerous and don’t account for the possible utility of a token beyond pure investment.
'Crypto Twitter' may hold less sway than people think
Another takeaway from the survey was that “Crypto Twitter” was not an important source of information for most of those who responded despite “perceived dominance.” Only 26.3% of respondents cited social media as a source of information for their crypto investments.
Concepts like financial overviews and management weigh more heavily on investor decision making than tokenomics and a crypto asset’s underlying network,” the report says.
White papers, the standard disclosure document for crypto tokens, “were rarely referenced as important sources of data and information,” with investors typically preferring “old-fashioned websites and traditional institutions like centralized exchanges and brokers for their information.”
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