Despite the continued volatility of cryptocurrencies, demand is on the rise and Asia is seeing related interest from various investors and financial service providers.
After the crypto market hit its all-time high of around $3 trillion in total value when Bitcoin peaked in mid-November, the digital asset class fell back to around $2 trillion.
But despite continued turmoil in the nascent market, Asia is still attracting growing interest among a diverse array of investors and vendors.
On the investor side, family offices in the region are expected to be a new demand driver in 2022.
According to a recent report by Campden Wealth and Raffles Family Office, only 19% of Asia-Pacific family offices were invested in cryptocurrencies, trailing their North American and European counterparts which allocated 30% and 17% to the digital asset class. .
However, the outsized returns have caught the attention of APAC family offices, with 53% calling cryptocurrencies a “proven investment” and 38% planning to increase their exposure this year.
Demand from retail investors is also on the rise, as evidenced by the growing introduction of crypto offerings at mainstream banks.
Just yesterday, the Philippine Unionbank – the recent buyer of Citi’s consumer banking business in the Philippines – announced that it would launch crypto trading and custody services with a prediction that the average Filipino would likely hold 3-5% of their wealth in digital assets, up from the current 1-2 percent.
And in November last year, Australia’s largest bank CBA became the first in the country to roll out cryptocurrency services for retail customers.
“The emergence and growing demand for digital currencies from customers creates both challenges and opportunities for the financial services industry, which has seen a significant number of new players and business models innovating in this space,” said CBA’s chief executive. matt comin.
Private banks: still conservative
In addition to local lenders, several global banks are also exploring opportunities in the space, such as DBS, which has 600 million Singapore dollars ($446 million) of digital assets in custody as of late October, and Standard Chartered which launched its London-based crypto. Zodia Custody company in July last year.
But pure-play private banks continue to be relatively cautious when testing the new market.
“For many investors, the natural hedge against inflation was gold but they were disappointed by the movements of gold […] and we started to see people finding refuge in cryptos,” said Pictet Wealth Management Asia Investment Director. Alexandre Tavazzi. “For our part, we are still working on the valuation [cryptocurrencies] and how to possibly offer them to our customers. We have not drawn any conclusions at this time.”
“It’s not something we’re reviewing or advising at this stage,” UBP’s CIO said Norman Villamin. “But one of the key messages we’re leaving with people for 2022 […] is to embrace many of these changes and identify the opportunities. And a lot of that change is going to create volatility and disruption.”