Affluent investors in Asia are neither shy nor ignorant about crypto, with research revealing that 52% of them held some form of a digital asset during Q1 2022.
According to research from Accenture published on Monday, digital assets, which include cryptocurrencies, stable coins and crypto funds, made up, on average, 7% of the surveyed investors’ portfolios, making it the fifth-largest asset class for investors in Asia.
This was more than they allocated to foreign currencies, commodities and collectibles, and in some cases, was on par with or exceeded the amount invested in private equity/venture capital and hedge funds.
Accenture said the survey was conducted with more than 3,200 clients across China, Hong Kong, India, Indonesia, Japan, Malaysia, Singapore and Thailand. The company defines an affluent investor as anyone that manages investable assets of between US$100,000 to $1 million.
Investors in Thailand and Indonesia had the largest percentage of digital assets in their portfolios compared to their peers.
Though half of the investors in Asia were already holding digital assets in Q1 2022, Accenture’s research indicates that a further 21% are expected to invest in them by the end of 2022, meaning as many as 73% of wealthy Asian investors could hold a digital asset by the end of the year.
“Digital assets represent a rare, clear industry white space with significant business opportunity.”
Wealth managers holding back
However, the firm found that wealth management firms, those that provide financial planning, tax, investment advice, and estate planning to their clients, have been slow to board the crypto train. Sixty-seven percent of wealth management firms said they have no plans to offer digital asset products or services.
“For wealth management firms, digital assets are a US$54bn revenue opportunity— that most are ignoring."
Wealth management firms cited a lack of belief and understanding of digital assets, a wait-and-see mindset and the operational complexity of launching a digital asset offering as the main reason for holding back, leading them to prioritize other initiatives instead.
Accenture said the lack of engagement by firms means that investors have been forced to get their financial advice about crypto from unreliable sources.
“This lack of engagement by firms means many clients are seeking advice about digital assets on unregulated forums, including peer-to-peer advice on social media.”
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However, Accenture has stressed the importance for wealth management firms to push forward into the digital asset space, or risk being left behind.
“While many firms are hesitant to enter the digital assets space, and for a range of reasons, their competitors have shown that success is possible.”
Asia’s investors have been warming up to crypto, particularly in the last year.
In April, a report by Gemini cryptocurrency exchange found that crypto adoption skyrocketed in 2021, particularly in countries such as India and Hong Kong. Around 45% of respondents in the Asia Pacific purchased their first crypto in 2021.