Despite the continued surge in crypto demand, most global banks are expected to remain cautious due to lacking expertise and agility, Saxo Market’s APAC chief executive Adam Reynolds told finews.asia, weeks after launching a new offering for digital currencies.
While regulators, governments and others continue to put pressure on the rise of cryptocurrencies, citing issues such as money laundering risks or high volatility, demand continues to climb higher and the financial sector is gradually responding with the launch of more related offerings.
But for global banks, Saxo Market’s Asia Pacific chief executive Adam Reynolds reckons that their entry into the emerging digital asset class will remain limited, at least in the initial stages.
«I think it’s very difficult for major banks to go full on into crypto because they just don’t have the expertise or the agile nature to be able to do that sort of thing,» Reynolds said in a recent conversation with finews.asia.
Longer-Term Outlook
In the longer term, Reynolds expects that bigger banks with continued interest will look to acquire instead of build in-house due to the origins of such technological developments being from smaller businesses.
But while blockchain technologies have empowered cryptocurrencies to potentially challenge fiat money, Reynolds believes that traditional financial institutions do not face the same threat from decentralized finance in the foreseeable future.
«Do I think that decentralized finance is going to displace banks substantially worldwide?» he asks. «I think there is potential but I’m not there yet.»
Stimulus-Driven
Ironically, policy actions to take down cryptocurrencies have paralleled policy actions to drive demand.
«Ever since we started with coronavirus last year, governments started pumping huge amounts of money from massive fiscal and monetary stimulus,» Reynolds explained.
«So we started the discussion that this debasement of the currency that is likely to occur because of massive stimulus is going to increase the demand for crypto and should be providing our clients with an access point.»
Crypto Offering
In response, Saxo Markets has launched its own crypto trading offering beginning in Asia with Singapore and Australia with plans for more market launches in the coming month.
The current offering includes bitcoin, ethereum and litecoin alongside the U.S. dollar, euro and Japanese yen.
Trading also occurs through derivatives like exchange-traded notes or crypto contracts rather than physical coins due to security risks from digital wallets and inefficiency for active traders.
Trading Demand
Based on early observations in the region, users tend to be younger with about 10 percent being high net worth individuals and 90 percent being retail investors.
Reynolds expects not only the investor base to grow in quantity and mix but even the pecking for cryptocurrencies.
«I think ethereum will overtake bitcoin at some stage in terms of market capitalization because of its smart contracts platform, effectively, for people to program within,» he said.
