View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Comment
October 5, 2021updated 17 Jan 2022 10:28am

China’s crypto ban should serve as a lesson for wealth managers

By Patrick Brusnahan

In a move that closed the last loopholes, the Chinese government has banned all crypto transactions and mining. The resulting price declines highlight the asset class’ inherent volatility. The China crypto ban is a big step. Wealth managers need to ensure investors are aware of the risks given that understanding of cryptocurrencies remains low – even in the HNW space.

Free Report
img

Analyze opportunies within the wealth management market in APAC

GlobalData’s ‘Asia-Pacific Wealth Management: Market Sizing and Opportunities to 2026’ report provides a comprehensive overview of the Asia-Pacific (APAC) wealth management market.
  • The report analyzes the APAC wealth and retail savings and investments markets. This includes affluent market size, both by number of individuals and the value of their liquid assets.
  • The affluent population grew by 5.3% in 2021 and is expected to grow at an AAGR of 4.8% between 2022 and 2026.
  • The value of liquid assets held by the affluent segment surged by 8.4% in 2021, backed by economic recovery. HNW individuals’ financial wealth grew by 12%, while mass affluent individuals’ wealth grew by 6.0%.
  • The report provides an analysis of factors driving liquid asset growth. It is also split into asset classes - equities, mutual funds, deposits, and bonds.
  • The affluent population are more risk-tolerant and invest a significant proportion of their investments in risky assets such as equities, compared to emerging affluent and mass market individuals.
The report also provides data and insights on the size of offshore holding of HNW investors in the APAC region.
by GlobalData
Enter your details here to receive your free Report.

Going forward, not only will all onshore crypto transaction be considered illicit financial activity, but also those provided by exchanges offshore. This has left local investors scrambling to access or protect their assets. While similar moves by other countries are unlikely, it shows that cryptocurrencies remain speculative assets. Within a day of the government’s announcement, the price of Bitcoin fell by more than 6% and Ether dived 9%.

Despite strong price volatility, demand for digital currencies has skyrocketed in recent years as investors are drawn in by capital appreciation opportunities. Data from our 2021 Global Wealth Managers Survey shows that two thirds of wealth managers report rising HNW demand for cryptocurrencies. Almost equally bullish, 47% expect further growth in the value of Bitcoin over the next 12 months, while 32% are neutral.

This positive outlook combined with sustained investor demand will continue to drive uptake. However, as cryptocurrencies occupy a greater share of investors’ portfolios, wealth managers will do well to ensure clients are aware of the risks involved – including trouble liquidating holdings.

Our data shows that globally, half of wealth managers agree that HNW investors’ understanding of cryptocurrencies remains limited; meanwhile just 17% disagree. Investors need to understand that Bitcoin and the like are not just digital currencies – they are investments without cash flow. As such, they need to be balanced with appropriate access to liquidity, ensuring investors can ride out these all too frequent storms, such as the China crypto ban.

Free Report
img

Analyze opportunies within the wealth management market in APAC

GlobalData’s ‘Asia-Pacific Wealth Management: Market Sizing and Opportunities to 2026’ report provides a comprehensive overview of the Asia-Pacific (APAC) wealth management market.
  • The report analyzes the APAC wealth and retail savings and investments markets. This includes affluent market size, both by number of individuals and the value of their liquid assets.
  • The affluent population grew by 5.3% in 2021 and is expected to grow at an AAGR of 4.8% between 2022 and 2026.
  • The value of liquid assets held by the affluent segment surged by 8.4% in 2021, backed by economic recovery. HNW individuals’ financial wealth grew by 12%, while mass affluent individuals’ wealth grew by 6.0%.
  • The report provides an analysis of factors driving liquid asset growth. It is also split into asset classes - equities, mutual funds, deposits, and bonds.
  • The affluent population are more risk-tolerant and invest a significant proportion of their investments in risky assets such as equities, compared to emerging affluent and mass market individuals.
The report also provides data and insights on the size of offshore holding of HNW investors in the APAC region.
by GlobalData
Enter your details here to receive your free Report.

NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. A weekly roundup of the latest news and analysis, sent every Wednesday. The industry's most comprehensive news and information delivered every month.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU

Thank you for subscribing to Private Banker International