The future success of traditional financial institutions and newly emerging fintech companies is not mutually exclusive. In fact, there is a growing trend of a «blended financial ecosystem», according to HashKey Capital CEO Deng Chao in a conversation with finews.asia.

Contemporary proponents of decentralized finance (DeFi) often consider the promise of reduced friction and the elimination of traditional financial institutions such as brokerages, exchanges or banks. Cryptocurrencies are a prime example with many tokens capable of enabling custody and transferal without using any intermediaries.  

But in an interview with finews.asia, Deng Chao, HashKey Singapore executive president and HashKey Capital CEO, underlined that traditional financial institutions continue to be relevant. 

Crypto ETFs

In the case of cryptocurrencies, conventional instruments and channels are already being utilized, showcasing a fusion between traditional and future finance. 

«Our recent launch of spot ETFs for Bitcoin and Ethereum is a perfect example,» Deng said on the passive vehicle made in partnership with Chinese asset manager Bosera, which debuted trading in late April. «Investors can now bridge their digital assets directly into the existing financial system, choosing to invest in these ETFs with either digital assets or fiat. That’s never happened before.» 

Custody Needs

In terms of holding cryptocurrencies, many tout the benefits of self-custody via cold wallets as the most secure means but others may still prefer taking a tradeoff for greater convenience, including institutional investors, some of whom hold significant values with needs in staking, re-staking, yields and other DeFi opportunities. 

«There needs to be a nuanced approach here that balances the self-sovereign principles of crypto with the realities of everyday life: we value convenience and simplicity, which are not usually two traits that the crypto sector is known for,» Deng noted. 

«Serve the Current Moment»

Aside from ETFs, HashKey Singapore is currently developing a suite of other services to meet client needs. They include specialist wealth advisory services to help build customized strategies for accredited investors, family offices and institutions. The firm is also enhancing its offering for professional and institutional investors by expanding the number of spot token offerings with increased liquidity coverage. 

«Finance has always been about finding products that serve the current moment, and we’re already seeing that shift happen in real-time,» Deng added. «We are seeing the emergence of a blended financial ecosystem that takes the best of  ‘traditional' finance and combines it with the best of crypto.» 

Regulatory Standards

In addition, a purely DeFi world may also create risks to unfamiliar users that may otherwise be protected by laws and regulations. During a fintech conference by «Money 20/20» in April, Deng spoke on a panel about varying adoption speeds in different markets due to regulatory, technological and cultural disparities as well as the need to develop clear legal and ethical standards to govern usage. 

«While crypto itself is borderless, regulations are not. And that’s not unique to digital currencies. We all must operate within the frameworks provided by our respective geographies, which makes for a complex landscape for any financial institution,» Deng added.