The Lux List / Finance

Over Half of All HNWIs Interested in Investing in Cryptocurrencies

Singapore possesses what the rich desire even more than cars and caviar – cryptocurrency.

Jul 05, 2018 | By LUXUO

The glittering skyline of Singapore, one of the richest cities in the world is often also a reflection of all the things that the rich can’t get enough of. From marinas stuffed with superyachts that there are waiting lists for berthing, to the highest number of super cars per capita, Singapore has all the toys, pleasures and entertainment that the rich are looking for. And if the latest World Wealth Report by Capgemini is anything to go by, Singapore possesses what the rich desire even more than cars and caviar – cryptocurrency.

According to the Capgemini report published two days ago, even though cryptocurrencies shot to prominence in 2017, the wealth management industry has been reticent to service their clients with access to the digital assets. Of the high net worth individuals (HNWIs) surveyed by Capgemini, over half of respondents were interested in investing in and more importantly “holding” cryptocurrencies, with almost a third globally expressing a “high degree of interest.”

According to the report, “Cryptocurrencies’ potential for investment returns and potential as a store of value are driving HNWI interest. Globally, 39.3% of HNWIs said investment return was the primary reason they would hold or purchase cryptocurrencies, while 19.3% cited the potential as an alternative store of value.”

While the “legacy” rich are starting to look into cryptocurrencies. The boom in initial coin offerings (ICOs), an alternative means of raising finance by issuing digital tokens for use on a company’s platform as well as the soaring value of cryptocurrencies has minted an entirely new category of HNWIs, dubbed aptly as the “crypto-affluent.” In their wake, an entire industry has sprung up over night to service this new demographic and cater to their every whim, from Lambos to luxury properties, there’s no request too big for those with bags of Bitcoin.

Over half of the globally well-heeled, or high net worth individuals, defined as those with investable assets over US$1 million are interested in investing in cryptocurrencies.

Companies such as Singapore-based Aditus, a decentralized luxury payment gateway that acts as a bridge for luxury merchants and crypto-affluents are empowering this new class of HNWIs to purchase the objects and sometimes the investments of their desire. According to Aditus co-founder and CEO Julian Peh, “What we’re seeing is the rise of crypto-affluents who were early adopters of cryptocurrencies now starting to actively look for ways to spend their returns.”

And whether it’s Lambos for your Litecoin, or Bitcoin for your bayfront condo, companies like Aditus have been doing a brisk trade catering to the whims of the crypto-affluents.

Aditus is a decentralized payment gateway connecting crypto-affluents with luxury merchants.

According to the Capgemini report, as wealth begins to transfer down to the next generation, these younger HNWIs place importance on receiving cryptocurrency information from primary wealth management firms or family offices which have been relied on for generations. But legacy wealth management firms have mostly been caught flatfooted when it comes to cryptocurrencies, either completely missing the opportunity or not possessing the requisite expertise to advise their clients adequately.

This is noted by the Capgemini report: “On the other hand, wealth management firms have been ambivalent when it comes to providing cryptocurrency information to HNWI clients.”

Much of the ambivalence stems from a lack of accredited resources for wealth managers looking to obtain an accredited education on digital assets. The trend has led to a flurry of online courses as well as universities rolling out cryptocurrency and blockchain courses to cater to the exploding demand for education in the nascent technology, some of greater practical value than others.

“To what extent are you interested in purchasing/holding cryptocurrencies?” – Source: Capgemini Financial Services Analysis, 2018; Capgemini Global HNW Insights Survey 2018.

The knowledge gap by wealth managers is forcing many HNWIs looking to other sources to learn more about digital assets. From online courses to meetups, more HNWIs from traditional sectors are looking to gain greater exposure to cryptocurrencies, with Capgemini noting that 26.9 percent of HNWIs currently “on the fence” about cryptocurrencies presenting an opportunity for wealth managers if they are able to engage these HNWIs in “meaningful dialogue.”

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