The interest in digital assets among family offices and high net worth investors (HNWIs) in Hong Kong and Singapore has surged, with more than half already invested in the asset class, and is expected to keep growing, according to a new report from KPMG.
The report, which is also co-authored by Aspen Digital, a digital asset management platform, found that 58% of respondents were already invested in digital assets and a further 34% are planning to make such investments.
The report also found that 60% of family offices and HNWIs are currently allocating less than 5% of their portfolios to digital assets, while 54% say they want to allocate between 5% and 30% to the asset class.
Currently, cryptocurrencies dominate investments with all of the respondents who are investing in digital assets owning Bitcoin and 87% owning Ethereum.
Meanwhile, 60% of respondents invest in non-fungible tokens, 58% of respondents invest in digital asset services providers such as cryptocurrency exchanges and 47% invest in decentralised finance tokens.
New products
Digital assets have taken off rapidly with a total market capitalisation now exceeding US$1trn.
KPMG partner Paul McSheaffrey said that the recent growth in the market means that new products will likely continue to emerge.
“Increasing allocation to digital assets requires related hedging and derivative products to allow investors to effectively manage risks. The development of such products outside of popular tokens such as Bitcoin and Ethereum will help to drive allocation to a wider range of digital assets,” he said.
He also noted that as institutional investors are looking for more regulatory certainty, this would likely lead to more regulatory developments.
Yan He, CEO of Aspen Digital, noted that the rise in digital assets would also lead to changes in research methodology.
“Compared to traditional equities, digital assets require a new fundamental analysis framework for screening investment opportunities. For example, on-chain data is a new metric to measure the network robustness of digital assets. As more institutions are expressing their interests to explore digital assets, we expect a more mature research methodology to evaluate the emerging asset class,” he said.
