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Swiss Private Bank Says Its Wealthy Clients Are Interested in Crypto

In a recent interview, Zeno Staub, the CEO of Swiss private banking and investment management group Vontobel Holding AG, talked about their clients’ interest in crypto.

The Vontobel CEO’s comments were made on July 27 during an interview with Bloomberg TV anchor Anna Edwards.

When Edwards Staub what Vontobel’s clients are asking for with regard to crypto, he replied:

Clients have an interest in digital assets. Clients have an interest in cryptocurrencies. We believe that the underlying technology is actually more important than a certain types of application.

We believe down the line blockchain technology is the logic consequence of the general trend of securitisation because it’s the only available technology that can create a trust without the central counterparty.

We will see major changes coming out of that going forward. What we offer to our clients is that we’ve wrapped some cryptocurrencies in a secure, convenient, easy to handle way, and clients appreciate that and allocate part of their wealth to that.

On 27 October 2017, Vontobel announced that it was expanding its Bitcoin product range by making available on the stock exchange (from 30 October 2017) “the first open-end exchange-traded bitcoin tracker certificate” and that this would provide “an interesting option for all those who believe in the cryptocurrency but don’t want to have to deal with IT administration.”

On January 4, during an interview with CNBC, Alli McCartneya Private Wealth Advisor at UBS, explained why there is “a lot of interest” in Bitcoin among her wealthy clients.

She said:

There’s a lot of interest, and there has been a lot of interest for a significant amount of time… A lot of very wealthy individuals, even those who have made their money in very traditional finance sources, take risk. And they understand the concept of taking risk…

I think the thing is that individuals that act like institutions — I mean not retail individuals — are getting in now as an asset-allocation play, and that I think is why you see such a run-up, is that you’re having some really big buys…

The story of the first couple of years was that here was a store of value that was apolitical and could be a diversifier. And then you fast-forward and, to my colleague’s point, you see the numbers going up, which always gets people interested. You see the adoption in the form of Bloomberg Galaxy Index. Then you go to Fidelity being a custodian and now you are at PayPal letting you buy and sell with it.

So adoption is going up, price is going up, and the lack of available alternatives in the market, in terms of being diversifiers, like bonds, have largely gone out the window in terms of their relative risk-return…

And by the way, unlike a retail investor, the assumption there is that these aren’t speculators. These are long-term buy-and-holds that can create some sort of substantive floor for the currency.

Goldman Sachs provided some interesting insights about family offices’ interest in investing in crypto in a recently-released report.

family office is “a privately held company that handles investment management and wealth management for a wealthy family, generally one with over $100 million in investable assets, with the goal being to effectively grow and transfer wealth across generations.”

The insights in this report come from Goldman’s first global survey of “family office stakeholders” and the financial services firm’s experience of working with such clients. The 150 survey respondents were based in the Americas (54%), Europe (23%) & the Middle East and Africa (23%), and Asia (23%).

According to the report, while most respondents have not yet invested in crypto, nearly half are thinking about getting into crypto in the future As for those respondents with no current crypto exposure, their main concern is suitability of cryptoassets as stores of value. There were also some who had reservations about “the underlying infrastructure (e.g., custody options and exchanges)” or their lack of understanding of the crypto space. Another issue that concerned some investors was the high energy consumption of Bitcoin mining.

Goldman went on to say that “some family offices are considering cryptocurrencies as a way to position for higher inflation, prolonged low rates, and other macroeconomic developments following a year of unprecedented global monetary and fiscal stimulus.”

DISCLAIMER

The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.