Digital assets on the rise in Asia, according to Cerulli


KUALA LUMPUR (September 28): Digital assets, including cryptocurrencies, are entering the financial mainstream, according to Cerulli Associates, a Boston-based global research and advisory firm.

In a statement released today, the company said major financial institutions are closely valuing digital assets while bringing digital asset innovation to illiquid asset classes like private capital.

He said that perhaps one of the most significant developments in this space in Asia has been the launch of the DBS Digital Exchange, announced last December in partnership with Singapore Exchange.

Cerulli said the move was important because it was one of the first digital exchanges to be launched by a traditional bank in Asia, backed by a leading international exchange.

He said that while digital asset trading is not new to Asia, DBS’s launch is unique in that it is limited to institutional investors and accredited investors.

The company explained that one area that is very likely to find its way into the general public is central bank digital currency (CBDC), which is virtual currency issued by a central bank.

He said that among the major countries, China is probably the most advanced, with the current development of its digital yuan.

Cerulli said that since CBDCs are indeed fiat currencies in digital form, digital money market funds holding these coins are a likely development.

He said that unlike cryptocurrencies, which most countries are wary of, CBDCs are seen as a good thing by central banks: they are profitable, can promote financial inclusion, help protect against money laundering. money and fraud, and are very useful vehicles through which monetary policy can be implemented.

Cerulli said digital assets will increasingly find their way into the portfolios of fund managers, with some in Asia already starting to provide access to these assets.

He said that initially it may just have been managers trying to come up with interesting new strategies, such as a basket of cryptocurrencies.

But in due course, if digital forums become mainstream methods of accessing liquidity for businesses, they will need to be embraced by asset managers, just like traditional equity and debt. To ignore these vehicles would be to ignore potential returns.

Cerulli Associates Asia Managing Director Ken Yap said even the most traditional fund managers would always be urged to keep abreast of developments in the digital world.

“The key will be to not look at digital assets as a separate asset class, but as another means of accessing existing assets.

“And just as fund managers have had to stay informed about new capital market structures, they will need to be present on digital assets,” Yap said.