Wells Fargo Investment Institute, the research division of Wells Fargo Wealth and Investment Management, has released a report highlighting the potential of cryptocurrencies as an investment opportunity akin to the early days of the internet.
In a Monday report titled, "Cryptocurrencies — Too early or too late?" the banking giant referred to cryptocurrencies as “viable investments,” but hinted there was no rush for investors to enter the still maturing market. Wells Fargo’s global investment strategy team said it did not subscribe to the idea that it was “too late to invest” in crypto, given that the space is “relatively young” in terms of other asset classes.
According to the banking giant, the technology behind crypto is following an adoption path similar to that of the internet in the early-to-mid 1990s, when “consumers still needed time to figure out what the technology is, what it can do and how it can benefit them.” However, like the internet, the rising number of crypto users suggests “the world is beginning to embrace the technology — and quickly.” According to a Crypto.com study from July, the number of global crypto users more than doubled from 100 million in January 2021 to 221 million in June.
“If this trend continues, cryptocurrencies could soon exit the early adoption phase and enter an inflection point of hyper-adoption, similar to other technologies,” said the report. “There is a point where adoption rates begin to rise and do not look back [...] Precise numbers aside, there is no doubt that global cryptocurrency adoption is rising, and could soon hit a hyper-inflection point.”
Singapore has seen a tenfold increase in crypto-related investments last year worth $1.48 billion, up from $110 million in 2020, according to KPMG's Pulse of Fintech report.
As per the study, the city-state has long been recognized as a center of cryptocurrency activity, with over $1.48 billion in investment completed last year alone.
KPMG suggests that the increase is in part due to government efforts to stimulate the capital market, such as establishing a special-purpose acquisition company (SPAC) listing framework to position the country as a choice location where fast-growing firms and unicorns can go public.
This year, regulators are ramping up their efforts to regulate speculative digital assets. Even as authorities impose even more regulation, KPMG forecasts that Singapore's crypto investment will remain strong this year.
As reported by Cointelegraph, the central bank ordered cryptocurrency firms to stop advertising their services to the general public in early January. Furthermore, most applicants have failed to pass the licensing procedure for permits to operate a regulated cryptocurrency business in Singapore.
Per the KPMG report, the majority of cryptocurrency and blockchain investments last year were focused on software and underlying infrastructure rather than services. The nascent sector made up a third of total fintech investment in Singapore, which rose to $3.94 billion last year as per KPMG.
KPMG also highlighted that Asia-Pacific's fintech investing hit a record high of $27.5 billion in 2021, with total funding surpassing $17.4 billion in the second half alone (compared to $11.5 billion in 2020). In 2021, venture capital funding rose to $19.6 billion from $11.5 billion in 2020.
Stock brokerage firm DriveWealth has entered the cryptocurrency industry by launching two subsidiaries designed to allow its partners to offer crypto trading to retail investors.
DriveWealth is a New Jersey-based company backed by Japanese tech giant Softbank and is valued at $2.85 billion.
The push into the crypto space was motivated by traders who are forced to trade across what DriveWealth CEO Bob Cortright told CNBC is an “unsustainable” transaction spread on Coinbase. He continued:
“As regulatory environments tighten around crypto and customers get more focused on spreads and efficiency, we can’t continue in a world where you can charge 200 basis points on a transaction.”
Coinbase is the largest US-based crypto exchange and charges fees as high as 4.5% of the transaction value plus a spread fee on its platform. The exchange earned 88% of its $1.2 billion in total revenue from those transaction fees in Q3, according to its financial report at the time.
The new crypto offerings are made possible by DriveWealth’s recent acquisition of Crypto-Systems, a separate crypto startup. Through that acquisition, DriveWealth launched its DriveLiquidity subsidiary which will provide liquidity for partners wishing to invest in and trade crypto assets.
This Daily Dose was brought to you by Cointelegraph.