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KPMG & Aspen Digital Study Reveals Wealthy Asian Investors Are Keen On Crypto

08/12/2022

MetaVentures Bangkok 2022

Bangkok, Thailand
14/12/2022
27/02/2023

ICBM Expo

Dubai, UAE
03/03/2023
Ff0mjqkaaaukhdf
Source: AdobeStock / kaew6566

“Big four” accounting firm KPMG and technology and financial services company Aspen Digital found that family offices (FO) and high-net-worth individuals (HNWIs) in Hong Kong and Singapore “have embraced” the digital asset class, with more than 90% of survey respondents having already invested in the space or planning to do so. 

Per KPMG China’s Partner Paul McSheaffrey and Aspen Digital’s CEO Yang He, the companies aimed to gain insights into the current activity of these two groups and their plans for future investment in the market. The report they produced is based on a survey of 30 FOs and HNWIs in Hong Kong and Singapore, carried out in the second quarter of 2022, as well as interviews with industry stakeholders.

The report found that nearly all respondents are interested in the sector, with a “particular interest” in crypto. 

It stated that,

“Despite the volatility in the digital asset market in the past two years, FOs and HNWIs are keen to invest in the sector. The survey found that 92% of respondents were interested in digital assets, with 58% of FOs and HNWIs already investing and 34% planning to do so.”

KPMG Aspen Digital Study Reveals Wealthy Asian Investors Are
Source: KPMG/Aspen Digital analysis

The main reason for this growing interest, said the authors, is the “huge” upside potential, given that investors have seen outsized returns since the space was born. 

Another factor is the increase in mainstream institutional investors getting into digital assets. This, argued the report, has given FOs and HNWIs more confidence when it comes to this specific sector.

Furthermore, there has also been a great amount of development in terms of infrastructure and high-quality talent acquisition, which is expected to continue. 

1666703220 601 KPMG Aspen Digital Study Reveals Wealthy Asian Investors Are
Source: KPMG/Aspen Digital analysis

However, these investors don’t seem to be putting a lot of money into digital assets yet. The report said that,

“Although many FOs and HNWIs are now investing in digital assets, the allocation typically remains relatively small, with most of them allocating less than 5% of their portfolios.”

More than half of the respondents said they would like to increase the allocation, while others said they plan to keep it at 5% or less than that. 

1666703220 556 KPMG Aspen Digital Study Reveals Wealthy Asian Investors Are
Source: KPMG/Aspen Digital analysis

BTC and ETH take the throne

When it comes to the type of digital assets that FOs and HNWIs are investing in, “cryptocurrencies dominate”, said the report, and added: 

“All of the respondents who are investing in digital assets own Bitcoin, and 87% Ethereum. Those who have not yet invested in the digital space are also most interested in cryptocurrencies and stablecoins.”

There is, however, a growing interest in non-fungible tokens (NFTs) and decentralized finance (DeFi), said the authors, stating that this reflects “the huge global growth in both these segments in the past two years.”

1666703223 243 KPMG Aspen Digital Study Reveals Wealthy Asian Investors Are
Source: KPMG/Aspen Digital analysis

Furthermore, FOs and HNWIs are investing in digital asset service providers, particularly cryptoasset exchanges and software developers. 58% of respondents already made such investments, while 21% said they are interested in doing so. 

“The key reasons given for investing in service providers include portfolio diversification benefits and exposure to ecosystem growth,” said the authors. 

Some respondents stated that, when choosing a crypto exchange, security was more important than product offerings.

Major hurdles

There are some concerns that these respondents reported as standing in their way of investing (more) in the crypto space.

These include:

  • diverging regulatory approaches to digital assets in different jurisdictions, as investors are looking for a clear regulatory regime that enables the trading of digital assets;
  • valuing digital assets which be challenging due to the lack of publicly available information;
  • limited research methodology and valuation approach on digital assets which hinder investment in service providers;
  • lack of clarity on how digital assets are treated for tax purposes;
  • financial reporting requirements for digital assets that are held for investment purposes, with the concern being not a lack of clarity, but that the required accounting treatment does not meet investors’ needs;
  • market volatility. 
1666703224 356 KPMG Aspen Digital Study Reveals Wealthy Asian Investors Are
Source: KPMG/Aspen Digital analysis

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Compiled by Coinbold

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