Digital assets continue to evolve and present exciting opportunities – Asian Wealth Management and Asian Private Banking


Philip Gradwell, Chief Economist at Chainalysis, speaks exclusively to Hubbis about how digital assets are affecting the asset and wealth management community.

Go to section:

1. How are digital assets affecting the asset and wealth management community?

2. How is the world of blockchain evolving?

3. What other assets can be added to the blockchain in the future?

4. Is crypto the start of a larger trend in asset and wealth management?

5. If a wealth manager wishes to capture these trends. What should they do next?

Video transcript

1. How are digital assets affecting the asset and wealth management community?

Digital assets have truly opened a new frontier for the wealth management community. Bitcoin has been around for over 10 years now. And during that time, I think a lot of people have become familiar with the concept that assets can be purely digital. But now we are entering a new phase, where a growing number of assets are starting to be digitized and cryptocurrencies are evolving. Now you don’t just have to own Bitcoin as a form of digital gold, you can also start borrowing or lending your cryptocurrencies in the new wave of decentralized finance. For wealth managers who are looking for new ways to invest in assets or generate some return, this whole new world is open and it is developing very quickly with rapid price appreciation, although obviously some volatility in prices. price also.

2. How is the world of blockchain evolving?

First of all, just to introduce what blockchain really is. It is a way for people who do not know each other, have never met, to transfer assets between them, without going through a third party. So, generally, you can send your money through a bank to the person you’re trying to send value to. Blockchain allows us to do this entirely digitally, without this middleman, using smart math and the power of ‘connectedness’ we have in this new digital world. This opens up a huge platform for innovation. There is a good analogy with the media world. Previously we could only get our news through a central newspaper or TV channel, and now we can get our news through big open platforms like Twitter or Facebook where anyone can give their opinion. . It transforms the opportunities of finance because there is a lot more experimentation and innovation than before. This makes this industry a bit more complex, crazy, and difficult to follow, but it also means that for savvy investors there is actually an opportunity for outsized returns.

3. What other assets can be added to the blockchain in the future?

Currently, the only assets on the blockchain are cryptocurrencies, these purely digital assets. But in the future, we are going to see more and more financial products moving to the blockchain. In fact, we’ve seen some very popular stocks and stocks move onto the blockchain before. You can actually trade Apple or Tesla shares as digital cryptocurrency tokens, so you can trade them 24/7. This is only the first step. I think we’ll see a lot more stocks move to the blockchain. We might even see more complicated derivatives moving on the blockchain. Then the next step, once the financial products have moved onto the blockchain, is to start moving the real world onto the blockchain. And this is where things are going to get very exciting. If you can actually create a digital token that represents, say, real estate, now you can get cash in that asset without having to sell the whole thing. You could potentially sell one coin at a time and then there would be an active secondary market for people to buy and sell that coin afterwards. We start in a purely digital world, moving towards financial products, and after that, putting real world assets on the blockchain.

4. Is crypto the start of a larger trend in asset and wealth management?

Crypto has established itself sufficiently to be its own asset class and there are opportunities and innovations underway. The big question is whether this is starting to spread and more and more assets are being digitized. I think over the next couple of years we’re going to see a lot of experimentation and a lot of clarity coming into the regulatory framework. And then the big question is whether digital assets will start to compete with the existing financial system on a very large scale? I really think there is potential for this. And we’ll start to see this first in cross-border trading or in the world of collectible assets. We are starting to see what are called non-fungible tokens come into the art. This will be a process over perhaps two to three years, in which we will see more and more examples of crypto enter this world of asset and wealth management, and then see if it really takes off after that. .

5. If a wealth manager wishes to capture these trends. What should they do next?

Now is the right time to start exploring space. And the first step is to join the webinar that we will be hosting, where we will go into more detail. The very first thing an asset or wealth manager can do is actually gain exposure to the cryptocurrency, potentially buying it through an exchange traded product or broker. This means that you can really buy Bitcoin or Ethereum at arm’s length, without owning the asset itself and all other concerns about its management are taken away from you, but then you can take it a step further. It is worth it to understand the data and information resources available, to read some reports, to follow some of the trends that are happening in the industry media. It’s about understanding how this next wave begins to develop so that you are comfortable taking advantage of opportunities as they arise. The next two years are going to be a key testing ground. And so, you just want to start developing your knowledge during that period of time.