Singapore-based exchange ADDX to recognize crypto assets of accredited investors
Singapore-based private market exchange ADDX will now recognize cryptocurrency assets for the purposes of onboarding accredited investors.
With this, the platform has become the first financial institution in Singapore to consider digital assets in its assessment of high-net-worth clients.
The move will allow more individuals to qualify for accredited investor status, which would grant them access to a new class of investment opportunities in the private markets – including private equity and venture capital funds, hedge funds, and pre-IPO companies.
Commenting on the development, ADDX’s CEO Oi-Yee Choo said: “Cryptocurrencies are here to stay. They no longer exist only on the fringes of wealth and investment conversations. With a large minority of investors owning crypto, it is reasonable for these digital assets to be recognized 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.”
Due to the volatility of crypto assets, the platform is set to introduce appropriate risk management measures to comply with regulations. For one, ADDX will only acknowledge cryptocurrencies with a high market capitalization, and it will apply a discount rate when valuing the assets.
It will also begin by recognizing three coins – Bitcoin, Ether, and USDC. The discount rates for the value of these holdings are 50 per cent for Bitcoin or Ether and 10 per cent for USDC.
Individuals, however, must meet specific eligibility criteria surrounding income and net financial assets in order to become accredited investors, as laid out in Singapore’s regulatory regime.
Choo said: “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.”
The company believes this opportunity to be particularly valuable at a time when the digital currency market is volatile and crypto ownership is at record highs. In Singapore, around 16 per cent of citizens hold cryptocurrency, while overall awareness sits at 90 per cent.