Family offices and the ultra-rich of Hong Kong and Singapore are among investors who have expressed interest in diversifying their portfolio of assets with the novel asset class, despite the price fluctuations of digital currencies over the last two years. A report from KPMG says that more than 90% of family offices and wealthy people in Singapore and Hong Kong are either thinking about investing in cryptocurrency or are already doing so.

KPMG China and Aspen Digital published their report “Investing in Digital Assets” on October 24. It discovered that as much as 58% of family offices (FOs) and high-net-worth individuals (HNWIs) of survey participants are already putting money into digital assets and that 34% “plan to do so.” The majority of the 30 Hong Kong and Singaporean family offices and HNWIs surveyed manage assets in the $10 million to $500 million range.

According to KPMG, the widespread adoption of cryptocurrencies by the ultra-wealthy has bolstered confidence in the industry, which has been driven by a rising trend in mainstream institutional interest. In addition, it mentioned that institutions now enjoy greater access to financial products related to digital assets, including regulated products.

In September, DBS, Singapore’s largest bank, announced that it would allow roughly 100,000 of its wealthy clients to access cryptocurrency trading services on its digital exchange (DDEx). In October, Coinhako, a cryptocurrency exchange, announced that they were among a small group of businesses to receive a license from Singapore’s Monetary Authority (MAS) to offer services related to digital payment tokens.

Most investors, however, are still only putting about 5% of their money into digital assets like Bitcoin (BTC), Ethereum (ETH), and stablecoins, per the report. 

Volatility, Unclear Regulations Stalling Investment in Crypto

According to the people who responded, there is still a barrier to entry for investments in the sector because of how volatile the market is, how hard it is to accurately value assets, and how unclear the laws are on digital assets. It is highlighted that because digital assets have only been around for a relatively short time, there is still a degree of uncertainty among FOs and HNWIs regarding the possibility of investing in the sector, particularly in regard to regulation and valuation.

However, KPMG pointed out that both countries’ regulatory landscapes might be becoming more transparent in the near future. In particular, it said that all VASPs doing business in Hong Kong would have to have applied for a license by March 2024. Likewise, Singapore is continuing to work on a more comprehensive set of cryptocurrency regulations.

On the Flipside

  • Currently, there is no specific legal framework in Hong Kong that regulates crypto assets, so no single regulatory body oversees them. But a number of financial regulators, such as the Securities and Futures Commission (SFC), the Hong Kong Monetary Authority, and the Insurance Authority (IA), have given guidance about crypto assets.

Why You Should Care

Singapore and Hong Kong are rapidly becoming the top cryptocurrency hubs, adding to their already impressive reputations as major international financial hubs. High net-worth individuals’ growing interest in cryptocurrency bodes well for the industry’s rapid development.

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