Singaporean private market exchange, ADDX, has become the first financial institution in the Southeast Asian financial hub to acknowledge cryptocurrencies as assets, allowing more investors to qualify for an ‘accredited’ status.
This means more investors can now participate in private market investment opportunities and access asset classes including private equity, venture capital funds, hedge funds and pre-IPO companies.
This comes after a rise in crypto ownership rates, with 30 per cent in Singapore, 24 per cent in Hong Kong, 20 per cent in the U.S. and 18 per cent in the U.K.
Aligned with Singapore’s financial regulations, ADDX will only recognise cryptocurrencies as net personal assets, not income or financial assets, for individuals to qualify as accredited investors.
ADDX will also initially consider only Bitcoin, Ether and USDC and will apply a discount rate when valuing the assets, which comes to 50 per cent for Bitcoin or Ether and 10 per cent for USDC.
Individuals can produce documents to qualify as an accredited investor with ADDX, showing the value of their net personal assets meets the SGD $2,000,000 threshold with the inclusion of crypto assets after the discount rate has been applied.
“Cryptocurrencies are here to stay. They no longer exist only on the fringes of wealth and investment conversations,” Oi-Yee Choo, CEO of ADDX, said.
“With a large minority of investors owning crypto, it is reasonable for these digital assets to be recognised as a part of one’s portfolio – not unlike any other assets that can be valued in the marketplace, such as real estate or equity.
“In line with ADDX’s mission of democratising private market investing, recognising crypto holdings helps us to serve a much wider segment of investors – not just investors with traditional holdings, but those who hold crypto as well.
“At a time when the markets are volatile, this move is also designed to enable crypto investors to diversify into the regulated private markets, which tend to be more stable across different phases of market cycles.”
Choo also said ADDX is “well-positioned” to bridge the gap between the world of traditional finance and digital assets with its understanding of blockchain technology and roadmap towards crypto acceptance.
“In time to come, we are likely to enable customers to fund their investment wallets with cryptocurrencies and to convert their assets between fiat currencies and crypto,” she said.