More than half of family offices in Singapore and Hong Kong want to increase their exposure to cryptocurrency over the next two years, according to a study from Cerulli.
The Boston-based consulting firm found that 55% of family offices in the two cities had indicated an interest in the asset class as part of its broader study on digital assets.
Meanwhile, there are signs that traditional asset managers are exploring digital assets. For example, some have debuted blockchain-themed mutual funds in Korea, Thailand and Singapore.
Interest is growing among some fund and wealth managers in Asia as they anticipate the retail demand for cryptocurrencies will spill over to mutual funds and exchange traded funds.
“Crypto funds offer an important asset-gathering opportunity for managers. For investors, the growing number of mutual funds and ETFs coming to market help to widen product choices or even legitimise crypto investing by providing arguably safer routes to accessing this asset class, compared to direct crypto investing,” said Ken Yap, managing director of Cerulli.
The study found that despite the recent fall in prices, there was strong retail demand for cryptocurrencies in Asia, particularly among younger and more risk-tolerant investors.
In South Korea, crypto trading volume have surpassed direct stock trading, ETFs and mutual funds among millennials and generation Z.
Apart from cryptocurrency, Cerulli also observed that traditional asset managers were debuting other types of digital assets funds such as blockchain-themed mutual funds in Korea, Thailand and Singapore.
Cerulli also said that regulatory barriers meant there has not yet been a proliferation of crypto funds in the region.
Korea does not yet permit the launch of crypto ETFs or mutual funds, while Singapore has warned against the general public trading cryptocurrencies or digital payment tokens.
Hong Kong and mainland China have also imposed strict bans on cryptocurrency trading by retail investors.
“In an environment of increasing regulatory scrutiny and market volatility, safety and security would be the key selling points for crypto-related funds vis-à-vis direct crypto investments,” said Yap.
“Marketing and education will also need to take into account how funds invest in underlying crypto assets, particularly if these products are targeted at younger investors who are savvier and more discerning about the growing digital space.”
In June, a survey from FleishmanHillard found that 45% of investors surveyed in mainland China, Hong Kong, Korea and Singapore were interested in increasing their exposure to cryptocurrency.
