Stephen Katte
Hong Kong and Singapore’s wealthy elite appear to be looking at digital assets with fervor after a new report from KPMG suggesting over 90% of family offices and high-net-worth individuals (HNWI) are interested in investing in the digital assets space or have already done so.
According to an Oct. 24 report from KPMG China and Aspen Digital titled “Investing in Digital Assets,” as much as 58% of family offices and HNWI of respondents in a recent survey are already investing in digital assets, and 34% “plan to do so.”
The survey took the pulse from 30 family offices and HNWIs in Hong Kong and Singapore with most respondents managing assets between $10 million to $500 million.
KPMG said the large crypto uptake among the ultra-wealthy has increased confidence in the sector, spurred by the increase in “mainstream institutional attention.”
It also noted institutions also have more accessibility to digital asset financial products, including regulated products.
Singapore’s largest bank, DBS, announced in Sept that they were expanding crypto services on its digital exchange (DDEx) to approximately 100,000 wealth clients who meet the criteria around their income to be classed as accredited investors, ensuring adherence to the financial authorities’ view that crypto assets are not suitable for retail investors.
Meanwhile, Crypto exchange Coinhako announced in October that they were among a small number of firms to receive a license from the Monetary Authority of Singapore (MAS) to offer Digital Payment Token services.
However, the allocations remain relatively small, with most allocating less than 5% of their portfolio to digital assets — mainly in Bitcoin, Ether and stablecoins.
Respondents cited market volatility and difficulties in accurate valuation and lack of regulatory clarity on digital assets continue to be a hurdle to investment in the sector.
“As digital assets are fairly new, there is still some uncertainty among FOs and HNWIs about investing in the sector, particularly regarding regulation and valuation,” wrote the report’s authors.
However, KMPG noted that regulatory clarity in the two countries could be changing for the better.
“For example, all virtual asset service providers (VASPs) in Hong Kong will have to apply for a license by March 2024. Singapore is also planning to broaden its cryptocurrency regulations.”
Hong Kong securities regulator recently announced it wants to allow retail investors to invest directly in digital assets and to reconsider current crypto trading requirements.
The Monetary Authority of Singapore (MAS) has been expanding crypto trading for accredited investors and several exchanges receiving preliminary approval to provide Digital Payment Token services in the city-state.
Earlier this month, Anchorage Digital co-founder and president Diogo Mónica said his company has chosen Singapore as a “jump point” into the wider Asia market because the country has a strong regulatory environment.
“It’s about being in a regime that’s friendly towards crypto and that businesses want to do business in. We’re institutional only, institutions are going to Singapore, so we’re following suit.”
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Jesse Coghlan
The United States Securities and Exchange Commission’s (SEC’s) more-than-enthusiastic crackdown on the crypto industry is being seen as a positive signal for the majority of crypto investors, according to a new survey.
Around 60% of 564 survey respondents in the latest MLIV Pulse survey from Bloomberg said they viewed the recent flurry of crypto crackdowns as a positive sign for investing in the asset class.
Around 65% of retail investors signaled they were “more likely” to invest with “greater enforcement against crypto” compared to 56% of professional investors.
Conversely, only 35% of retail and 44% of professional investors said they would be “less likely” to invest as a result of more enforcement action.
The U.S. SEC has stepped up its actions over the past months, with high-profile investigations of bankrupt crypto companies Celsius Network and Three Arrows Capital, along with a reported probe into Yuga Labs and the wider nonfungible token (NFT) space.
It also famously fined reality television star Kim Kardashian to the tune of $1.26 million for promoting the EthereumMAX cryptocurrency without proper disclosures.
The investor sentiment appears to run in contrast to many U.S. lawmakers and crypto industry participants, who have repeatedly criticized the SEC for taking what they call a “regulation by enforcement” approach to cryptocurrencies.
Gurbir Grewal, the SEC’s enforcement director, said in September it will investigate crypto firms regardless of the narrative that it’s “stifling innovation.”
The SEC has also boosted its ability to handle specialized issuer filings by adding an Office of Crypto Assets in September, purely focused on dealing with crypto asset applications and services.
Despite the interest gained from investors by the crypto crackdowns, the market conditions have seen many major cryptocurrencies sit within a tight price band for months and around 43% of survey respondents said they would increase their crypto exposure over the next 12 months.
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Brayden Lindrea
A shareholder’s open letter to Meta CEO Mark Zuckerberg has labeled the tech giant’s investment into the Metaverse as “super-sized and terrifying.”
The shareholder has urged the company to scale down its investment in the metaverse and its related technology arm amid a significant fall in its stock price over the last 18 months.
The open letter was published on Oct. 24 and was directed at Zuckerberg and the board of directors. It was authored by Brad Gerstner, CEO and founder of technology investment firm Altimeter Capital, which owns roughly a 0.11% share in Meta, according to Hedge Follow.
Gerstner said that Meta’s foray into the metaverse, while important, should not command as much investment from the company as it currently does.
He said the company has announced investments of $10 billion to $15 billion per year into its Metaverse project, including AR/ VR tech and Horizon World, but “may take 10 years to yield results,” explaining:
“An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards.”
Rather, he has urged the company to focus more on artificial intelligence (AI) and less on the metaverse, as it “has the potential to drive more economic productivity than the internet itself.”
“While most companies will struggle to monetize AI, we believe Meta is incredibly well positioned to leverage AI to make all of its existing products better,” he added.
Gerstner’s comments come on the same day the Bank of America downgraded Meta from a “buy” to “neutral” valuation, partly due to its Metaverse investments likely to remain an “overhang” on the stock because of the “lack of progress” and “new competition from Apple.”
Gerstner added that over the last 18 months, Meta’s stock has fallen 55% compared to an average of 19% for its “big-tech peers,” which he suggests “mirrors the lost confidence in the company, not just the bad mood of the market.”
Gerstner isn’t the only person to think the future of the metaverse is a relatively “uncertain” one either.
On July 30, Ethereum co-founder Vitalik Buterin said that while “the Metaverse will happen,” corporate attempts such as those by Facebook will “misfire” because “it’s far too early to know what people actually want.”
The share price for Meta Platforms Inc has plummeted 60.53% over the last year to $129.72 at the time of writing — a far greater fall in the current bear market than the likes of Apple, Amazon and Google.
Meta is set to report its third-quarter 2022 results on Oct. 26.
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This Daily Dose was brought to you by Cointelegraph.
