Industry Surveys

UK Wealth Managers Should Embrace Crypto Services – Survey

Amanda Cheesley, Deputy Editor, London, 10 August 2022

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New research by Avaloq, a Switzerland-based specialist in digital banking solutions and wealth management technology, shows that there is potential for wealth managers to offer crypto investing.

Despite the rising volatility on cryptoasset markets, a survey by Avaloq released this week shows that 89 per cent of UK investors without crypto or currently investing through an exchange are keen to invest in crypto via their traditional financial provider.

Avaloq’s survey also found that 79 per cent of crypto investors buy and sell through an exchange, with less than a quarter investing via their traditional bank or wealth manager.

The survey covered 600 UK-based investors in 2022, of which 300 are retail (with investable assets of £10,000 ($12,111) – £250,000) and 300 are mass affluent to UHNW individuals (with investable assets of at least £250,000).

Nevertheless, Avaloq found that 25 per cent of investors don’t invest in crypto due to a lack of trust in crypto exchanges. The most cited reason for not investing in cryptos, identified by a third of respondents, is that investors are unsure about how to enter the crypto market, closely followed by 31 per cent who believe the market is too volatile, the firm said in a statement.

Prices of bitcoin, for example, have tumbled this year. Over one year to 9 August, prices have slumped by almost 49 per cent. Two main stablecoins from the crypto project Terra also collapsed with some calling the incident a Ponzi scheme. Terra dollar’s sister Luna fell significantly. UST lost its dollar peg when millions of investors went to cash in their tokens at the same time. Investors learned that the UST reserve mechanism was flawed – UST is an algorithmic stablecoin, backed by its sister asset Luna.  

Likewise, uncertainty about how to get started was also the most common reason, cited by 41 per cent of investors, for not investing in non-fungible tokens, the firm added.

In light of this, Avaloq believes that wealth managers should consider expanding their services to digital assets beyond cryptocurrencies and begin offering their clients advice as well as accessible options for investing in NFTs such as fine art or property.

The firm thinks that by providing trusted advice and tailored crypto solutions, banks and wealth managers can help broaden access to this new investment universe and help create a more diversified digital asset marketplace.

Welcoming the results, Nils Bulling, head of Strategic Innovation, Ecosystem and Digital Assets at Avaloq, said: “These findings highlight the immense potential for wealth managers to integrate digital assets into their offering to act as the bridge between centralised and decentralised finance. Especially as digital assets become more easily tradeable – both in the real world and in the metaverse.”

“In the future, a digital assets offering will become increasingly important to remaining competitive, as many investors across all wealth segments will expect their financial provider to offer a one-stop-shop for advisory, investment and custodian services for both fiat and digital assets,” he added.

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