KPMG China and Aspen Digital take a look at the future

KPMG China, in collaboration with Aspen Digital, has published a report on the perspectives of ‘ family offices’ and high net worth individuals in Hong Kong and Singapore on investing in digital assets, including bitcoin. The report is based on a survey of this group of investors and interviews with Bitcoin industry stakeholders.

The report takes a closer look at how family offices family offices A family office is a financial service provider that supports the (financial) objectives and wishes of a wealthy individual, family or family business through, among other things, asset management. One can also think of managing (setting up) complex legal structures and tax issues. and high net worth individuals invest, what drives their choices and what they see as the main challenges. The report also examines current market conditions and looks ahead.

Growing interest

Despite volatility, family offices and high net worth individuals are all too happy to invest in digital assets, including bitcoin. They are also not shy about investing in startups in the Bitcoin sector. The survey shows that 92% of respondents are interested in investing, with 58% of family offices and high net worth individuals already investing and 34% planning to do so.

The driving force behind the growing interest – freely translated – appears to be mainly greed. In other words: investors are diligently looking for excessive returns. Another factor is the proliferation of institutional investors, parties investing large sums of money, making family offices and high net worth individuals more confident in digital assets than before.

The Bitcoin sector has undergone tremendous development in terms of infrastructure and attracting talent over the past few decades. This is also not expected to decrease, if the report is to be believed. We recently saw Nasdaq launch a bitcoin custody service for institutional investors. This can possibly be seen as a continuation of development.

How do they invest?

Although 58% of family offices and high net worth individuals are currently already investing in digital assets, their allocation to this new asset class appears to be asset class An asset class is a category of investments that have similar characteristics and are subject to the same or similar rules (legislation and regulations) to be. Think of stocks, bonds, real estate, cash and commodities. relatively small. Most of the respondents allocate less than 5% of their investment portfolio to the asset class. However, more than half of the respondents would like to increase this percentage.

Cryptocurrencies dominate among digital assets in which family offices and high net worth individuals invest. All respondents who already invest in cryptocurrencies own bitcoin. The report also shows that family offices and high net worth individuals prefer user-friendly exchanges with good customer service. In some cases, respondents considered security more important than a large product range.

Main challenges

Since digital assets are still relatively new, there is still some uncertainty among family offices and high net worth individuals about investing in the sector. This is particularly the case in the field of regulations. According to the research, investors are looking for clear rules, also in the field of taxation.

In Asia, regulators are seeking a balance of investor protection that does not hinder the growth of the industry. For example, a new licensing regime for bitcoin companies will come into effect in Hong Kong on March 1, 2023. Such a licensing regime is already in place in Singapore. Singapore, like Switzerland and Estonia, is a forerunner in terms of regulation and is seen by some as the place to be for bitcoin companies.

Although there are still challenges for the Bitcoin sector, the report shows that family offices and high net worth individuals in Southeast Asia have a serious interest in the sector. In times where central banks keep raising policy rates, bitcoin seems to be becoming more and more relevant in the world.

The report is based on a survey of 30 family offices and high net worth individuals in Hong Kong and Singapore. More than half (61%) of respondents have between $10 and $500 million under management. 12% of respondents have more than $500 million under management.

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