Three-quarters of Asia's wealthy investors will own digital assets by 2022
Seventy-three percent of "affluent" investors in Asia intend to hold some form of digital assets by the end of 2022, according to a new report from consulting firm Accenture.
It's unclear how Accenture surveyed the population across the expansive region or defined "affluent" investors. What's clear is that the well-to-do in Asia, like their counterparts in the U.S., are increasingly seeking digital assets -- which can include cryptocurrencies, stable coins, crypto investment funds, security tokens and asset-backed tokens -- to build their personal wealth.
Currently, 52% of affluent investors in Asia already hold digital assets, according to Accenture. In the U.S., as many as 83% of millennial millionaires owned cryptocurrency, according to a survey released by CNBC in December.
Despite the rising interest among Asia's investors, most wealth management firms in the region do not yet offer clients a digital assets proposition — and two-thirds of firms currently have no plans to do so, according to Accenture.
On the other hand, a crop of startups has sprung up to address the growing needs for crypto-native financial services from high-net-worth and institutional investors in Asia. One of the most well-funded crypto asset managers in the region is Amber Group, which was founded in 2018 by a team of former Morgan Stanley traders. The startup hit a $3 billion valuation in its fundraising close in February and is reportedly raising a new round at a $10 billion valuation. Babel is another contender in the space, which saw its valuation rise to $2 billion in May.
While companies like Amber offer an all-encompassing crypto-asset platform for investors, other startups are developing the infrastructure undergirding crypto financial products.
Staking, for instance, has become a popular way for investors to earn passive income. It works by keeping one's cryptocurrencies locked in a certain network to obtain rewards, sort of like an interest-bearing savings account. That's because certain networks like Ethereum verify transactions by using a "consensus mechanism" called "proof of stake," doing away with centralized intermediaries.
The process of staking or putting one's tokens into a network to prove the legitimacy of a blockchain transaction might be too technical for the average investor, so services like Singapore-based RockX emerged to provide staking as a service for wealthy individuals and institutions. The startup raised a $6 million Series A led by Amber in April and has plans to plug its technology into Amber's list of product offerings.
In a year's time, RockX's assets under management surged to $1 billion from $200 million, its founder and CEO Zhuling Chen told TechCrunch in May.
Chen expected Asia-based investors' demand for staking to grow rapidly in the coming years. Many Western users have already explored staking, but the area is just starting to get noticed in Asia, he observed. In the first few years following Bitcoin's birth, Asia accounted for a substantial chunk of the world's crypto retail investors, who were mostly trading tokens on exchanges for short-term gains. Now that institutions and family offices in the region increasingly want to add crypto to their long-term portfolios, staking presents an investable opportunity to them, reckoned Chen.