HUBBIS DIGITAL ASSETS IN WEALTH MANAGEMENT FORUM - Dubai

Setting the Scene for the Day

There are still plenty of sceptics amongst the private banks and Independent Wealth Managers (and Family Offices) but for what is perhaps the majority today, digital assets are part of our collective futures.

These banks and firms increasingly consider that their private clients should not only understand more about digital assets, but they should to some extent at least actively participate by building some exposures in order to understand more about buying, storing, custody, and, of course, the vicissitudes of market pricing and volatility.

Why? Because there is more than a sporting chance that the future is populated by more and more digital assets of all types.

The November 15 event will aim to stimulate both vital information flows and lively debate on the importance of digital assets to the wealth management community in the UAE and further afield, looking at the evolution of cryptocurrencies and digital assets/tokenisation, and in particular analysing how the wealth management community can help educate themselves, their advisors and their private clients on this evolving market, and then help deliver the right types of products and execution.

They will look under the hood of the expanding digital assets ecosystem to consider what makes the different participants valid partners in digital assets for the established private banks and independent wealth management firms. And they will discuss how regulation and licensing are evolving and how that can help the nascent digital assets market grow and mature to the fully professionalised levels they wish to see where digital assets are more genuinely part of the core assets that private clients and their advisors are comfortable with. 

The crypto storms have been receding since very late in 2022, and there is again some greater optimism in the air, albeit easily deflated when bad news emerges. Yes, cryptocurrencies took a major price battering last year, with Bitcoin slumping roughly 75% from November 2021 to November 2022, when news of the FTX collapse hit the markets. The nascent market for tokenisation of real-world financial and physical assets also suffered collateral damage, as general confidence waned.

But there is optimism amongst many advocates of these markets that this is a somewhat predictable phase of bloodletting that will see the entire body of digital assets consolidate, and then strengthen in time. They remind us also that the FTX type debacle has been witnessed far too often – and usually with far more destructive effect - in the world of traditional finance.

These optimists argue that the flight to quality that is also now taking place is very timely and a huge positive for the entire emerging landscape of cryptos and digital assets.

They maintain that the regulators and every committed participant in this expanding ecosystem are now focusing on greater caution, deeper due diligence, better oversight, improved governance and operational discipline, and far more rigorous risk management.

They are also encouraged that there will also be a flight to better quality jurisdictions, and away from some of the more esoteric centres whose standards and practices have perhaps already been found out, and where there could be associated reputational taint. And they say that as far better self-governance and self-regulation also penetrate these markets, any rogue players will increasingly be weeded out, or just wither in the dark.

And they conclude that all this will help investors of all types, from a local retail buyer in Dubai to a sovereign wealth fund in Europe.

A steadily rising number of mass affluent, high-net-worth (HNW) and ultra-HNW investors have for the past several years been dipping their toes in the cryptos markets, and we are now seeing the same type of activity emerge in the UAE and Middle East. Some might rationalise their activity as portfolio diversification, while others fully admit these investments are purely speculative.  There are also plenty of private clients everywhere who still shun cryptocurrencies, and who remain extremely wary of any type of digital assets.

So too there is a dichotomy in the wealth management industry. There are those private banks and independent wealth managers in the region who are ‘believers’, who consider this to be the start of a global financial revolution and therefore that they should be positioning themselves in the market for their clients and for a new business opportunity. And there are the cryptos detractors who argue that this is all far worse even than Tulip Mania and should be spurned by any sensible wealth management advisor.    

But whatever position any such investors or advisors adopt, the reality is actually that the lead for these markets in the future will increasingly come from the world’s leading asset managers and institutional investors. 

During a seminal interview Hubbis conducted with the head of a leading global cryptos and digital assets data and services platform earlier in 2023, she stated that there is barely a single major institutional investor globally today that is not taking cryptos seriously and/or building dedicated in-house expertise. She reported that virtually all of these leading institutional asset managers and investors are also positioning themselves for the next major phase in the form of tokenisation of real-world financial and physical assets.

She stressed how this institutionalisation, combined with the impact of the FTX and other crises, is helping drive better regulation, improved oversight and enhanced operational protocols and practices.

She and other specialists we have interviewed or hosted on panel discussions believe that market activity must and will in the future be driven far more by transparent price and liquidity discovery, particularly around cryptos, which otherwise defy traditional valuation metrics. And at the same time, the market proponents believe it is a responsibility of the ‘good’ players in the market to work harder to provide better education and awareness of what cryptos are, and what tokenisation might represent. 

They also report that the institutionalisation of these markets, far from being derailed by the events of 2022, has actually been surprisingly rapidly reinforced, refocused and re-energised.

All these developments will improve the transparency and solidity of the emerging cryptos sector and provide a stronger springboard for the nascent tokenisation markets, which many advocates argue will rapidly expand to dwarf the cryptos markets and act as the perfect digitised complement to the world of mainstream public and private financial assets.

For Asia’s private clients, and for the wealth management industry, all this means that their future decisions around cryptos and other digital assets will, in the future, very likely be based on a far more institutional marketplace. And that can only be a major and very positive step forward.

And to give you even more understanding of what you can expect from this digital assets event, we can refer you to the very successful inaugural Hubbis Digital Assets in Wealth event that took place in Singapore in late 2022 and on which this Forum will be based in terms of content and structure.

Here is a link to selected reports and videos from that very successful 2022 Forum in Singapore CLICK HERE