Once lambasted by some for being a tulip mania repeat, the presence of modest crypto allocation or more in Asian investor portfolios is now commonplace. 

Crypto ownership in Asia – especially amongst the wealthy – is no longer a hot talking point as the region achieved widespread adoption in 2022. 

58 percent of family offices and high net worth individuals (HNWI) in Hong Kong and Singapore have been investing in digital assets, according to a study by KPMG China and Aspen Digital, with another 34 percent planning to do so. 

And despite market woes this year, sentiments remain strong amongst those already invested with 59 percent of APAC family offices in the market planning to hold their allocations alongside 25 percent looking to increase exposure, according to a report by Raffles Family Office and Campden Wealth.

Investor Base

In fact, crypto demand is extending beyond the base of just the wealthiest investors in the region. 

In September, DBS made its digital exchange, DDEx, accessible to all wealth clients who are accredited investors to respond to rising interest. Crypto trading on DDEx was previously limited to corporate and institutional investors, family offices and private banking clients (minimum of S$5 million or $3.7 million in investable assets). 

Demand was also evident amongst mass affluent individuals with 50 percent of investors from the segment interested in cryptocurrencies after May 2022, following the Luna market crash, compared to 25 percent prior, according to a study by Longitude Research and Matrixport. 

Bank Optimism

What’s more, an increasing number of global banks that are openly expressing optimism about the outlook for the digital asset class, especially due to expectations of regulatory clarity following the FTX collapse.

«Although investors have suffered significant losses, we believe this second crypto winter will be a net positive because the FTX collapse will edge the crypto ecosystem closer to the established financial sector,» said Deutsche Bank macro strategist Marion Laboure. 

«In fact, we see the establishment of a regulatory framework as the needed catalyst to massively ramp the institutional adoption of crypto,» added JPMorgan equity analyst Steven Alexopoulos, calling the FTX downfall «one step back […] two steps forward» for the market.

Not All Convinced

Nonetheless, not all are convinced such as HSBC’s Noel Quinn who made clear that the British lender was not entering the crypto business in any way and was more negative than other banks on the asset class. Pictet's Tee Fong Seng also said that there was currently no place for crypto in private banking clients’ portfolios.

«If you look at the volatility for the last two years, you can make a lot of money, you can lose a lot of money,» Tee said. «The question is, when do we bring the clients into the picture?»

According to KPMG China and Aspen Digital’s study, just 8 percent of family offices and HNWIs were neither invested nor interested in cryptocurrencies.