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The crypto craze amongst Asian buyers is spurring asset managers within the area to grab alternatives to woo them over with their merchandise regardless of tightening regulation, Cerulli Associates notes in a brand new report.
A quantity of cryptocurrency and blockchain-focused funds that spend money on the broader universe with out instantly investing in cryptocurrency have been rolled out this previous yr in Singapore, Hong Kong and Korea, whereas Australia has seen the area’s first change traded funds with direct publicity to bitcoin and ether.
“For investors, the growing number of mutual funds and ETFs coming to market help to widen product choices or even legitimise crypto investing by providing arguably safer routes to accessing this asset class, compared to direct crypto investing,” mentioned Ken Yap, Singapore-based managing director for Asia at Cerulli.
“Crypto funds offer an important asset-gathering opportunity for managers,” Yap added.
Regional regulators have been cracking down on the asset class, nevertheless, with the Monetary Authority of Singapore curtailing retail access to crypto in August and Thailand’s Securities and Exchange Commission overhauling advertising rules for digital asset corporations.
South Korea additionally doesn’t at present permit local players to faucet companies from cryptocurrency exchanges.
This atmosphere of growing regulatory scrutiny and market volatility, nevertheless, can be “key selling points” for asset managers in offering crypto-related funds, moderately than merchandise which have direct publicity to the asset class, mentioned Yap.
The rising regulation has not stopped Asian managers from searching for alternatives on this area, with a quantity of Korean corporations taking steps to develop their digital asset capabilities.
In January, Korea’s Mirae Asset Financial Group announced plans to roll out a digital belongings enterprise that will initially goal custody companies for cryptocurrency and non-fungible tokens and finally create loans and funds tied to digital belongings, the Korea Economic Daily reported, citing business sources. That push got here amid rising demand for such companies.
KB Asset Management, South Korea’s largest financial institution, introduced in February that it had created a digital asset administration preparatory committee to discover the event of digital belongings and synthetic intelligence funds.
KB AM rolled out the KB Global Digital Chain Economy fund, the primary technique within the nation that focuses on investments in blockchain know-how corporations, in September final yr.
Generation Z and millennials had been fuelling the curiosity in crypto in South Korea, mentioned Cerulli.
Singapore can be seeing robust curiosity amongst younger buyers, with Cerulli citing a survey from final yr that discovered 51 per cent of these aged 25 to 44 had been extra prepared to spend money on crypto, whereas solely 36 per cent of these aged 45 and over confirmed the identical curiosity.
At the beginning of the yr, BNY Mellon Investment Management was preparing to launch Singapore’s first retail-oriented fund that invests within the blockchain universe, amid rising curiosity in crypto belongings and associated know-how amongst native buyers.
Thailand and Vietnam have additionally emerged as hotbeds for retail cryptocurrency investments in south-east Asia, even within the face of a worldwide market rout and tightened rules imposed on the extremely risky sector.
Thailand recorded $135.9bn in crypto worth transacted within the 12 months to June 2022, whereas Vietnam had $112.6bn, in line with a report printed by blockchain information platform Chainalysis on September 21.
Crypto has additionally drawn curiosity from high-net-worth people, with Cerulli reporting that some non-public banks and household places of work in each Singapore and Hong Kong are “seeing interest in direct crypto investing or crypto ETFs”.
There is demand from distributors as effectively, with Cerulli’s survey indicating that they need asset managers to “develop niche product ideas that offer long-term opportunities, including technology themes such as blockchain and crypto”.
ETFs are seen as one other solution to give much more retail buyers entry to crypto. Australia has emerged as a regional chief within the crypto ETF area.
Australia’s first three cryptocurrency ETFs started trading in May. The Cosmos Purpose Bitcoin Access, 21Shares Bitcoin ETP and 21Shares Ethereum ETP ETFs went stay on Australia’s various change, previously generally known as Chi-X Australia, that month.
In June, the Hong Kong arm of South Korea’s Samsung Asset Management rolled out what it known as the first-ever world blockchain-related ETF in Asia. The Samsung Blockchain Technologies ETF is actively managed and may spend money on blockchain-related ETFs, akin to cryptocurrency futures ETFs listed within the US.
*Ignites Asia is a information service printed by FT Specialist for professionals working within the asset administration business. It covers every little thing from new product launches to rules and business tendencies. Trials and subscriptions can be found at ignitesasia.com.