Asia’s hyper-rich undeterred by crypto worries

While the broader private investor market may still have reservations about cryptocurrencies, some of Asia’s wealthiest and most prominent families are increasingly adding exposure to the digital asset class.

2022 was not a year of massive promotion of cryptocurrencies. The fall of various tokens and companies such as TerraUSD or Three Arrows has undoubtedly shaken the confidence of many investors. Regulators have been cautious when addressing the digital asset class, with many exploring or opting to tighten rules, especially for retail users.

But among wealthy individuals and families – particularly in Asia’s upper echelons – there are signs of further adoption amid historically low market levels with a handful of high-profile examples in 2022.

demand at the top

In March, before the collapse of the stablecoin TerraUSD, real estate mogul and managing director of New World Development Adrian Cheng announced that it participated in the $88 million funding round of Hong Kong-based crypto custodian Hex Trust through its venture capital firm C Ventures which also invested in the Singapore-based crypto firm Matrixport last year.

But even after the market was hit with a series of negative headlines and massive risk reduction, others were looking to enter. In August, one of Thailand’s richest CEOs and Gulf Energy Development Sarath Ratanavadi announced its ambitions to boost investment in the blockchain ecosystem with plans to seek a license to operate a digital asset exchange and brokerage partnership with crypto giant Binance.

And just last week, Singaporean elites also joined the party with Whampoa Group announcing plans to raise $50m for a crypto-related hedge fund and deploy $100m for a private equity fund. risk in the same space. The multi-family office was co-founded by Lee Han Shiha member of the family who founded OCBC, and Amy Leeniece of the first Prime Minister of Singapore Lee Kuan Yew.

Important Money Tracks

Even among High Net Worth Individuals (HNWIs), mass adoption remains elusive. According to a recent study by Lombard Odier, only 17% of High Net Worth Individuals (HNWIs) have more than 5% of their portfolios allocated to cryptocurrencies, with 20% looking to increase weightings.

While this may seem like a relatively small number, it could represent exponentially larger proportions depending on the size of respondents’ wealth. According to Capgemini, Asia is home to 7.2 million HNWIs with a total wealth of over $25 trillion. But the region’s 50 richest families alone account for 2.7% of that total with $700 billion in wealth, according to Forbes data.

“Some of the larger family offices are trying, they are exploring and they want advice on [cryptocurrencies]said JP Morgan Private Bank’s head of Hong Kong and the Philippines. Paul Thompson in a panel last month. “From a firm standpoint, we are in the process of determining what our offer should be. This is a difficult area to advise, especially if you are a private bank.”

Resumption since June?

As early as June, there were signs that investors were returning, with JP Morgan strategists including Nikolaos Panigirtzoglou pointing out that the deleveraging cycle may be coming to an end, as evidenced by the reduction in net leverage of crypto firms. Volumes on the DBS digital exchange (for institutional and accredited investors only) doubled during the month compared to April, with buy orders accounting for 90% of trades and clientele growing by 10%.

And this time around, even the crypto bears approach the digital asset class with a different tone. While the CEO of HSBC Noel Quinn insisted there were lingering concerns about crypto volatility and suitability for customers, he dodged JP Morgan CEO’s past mistakes Jamie Dimon refusing to predict its ultimate outcome.

“I’m not going to predict where this will go in the future,” he said.