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London Blockchain Conference 2024: ‘Non-Crypto-Native’ High Net Worth Investors on the Rise
Complete regulatory compliance is needed for the industry to attract high-net-worth investors from the middle market, according to a presentation on Thursday from the head of commerce at blockchain payment service Coinify.
Speaking on the last day of London Blockchain Conference 2024, Andrew BellinghamHead of Commerce at Coinify, he outlined what the industry needs to do to attract more high-net-worth individuals (HNWIs).
Coinify is a leading provider of blockchain payment solutions. According to its website, its mission is to “facilitate the global expansion and adoption of virtual currencies in a safe, compliant and regulated manner.”
Addressing a packed ‘spotlight’ stage in the main hall at LBC 2024, Bellingham outlined the company’s view on the current state of the digital assets market:
“Retail traders have traditionally driven the market… only when we saw ETFs did we really see institutional inventors. When it comes to high net worth inventors, all they know is that they want exposure to this asset class.”
Regarding the geographic origins, age range and preferred assets of this “often elusive market segment,” Bellingham revealed, based on Coinify data and research, that the average age is 52 years old and the 46% come from the EU, while 36% come from North America.
“North Americans tend to be a little more risk-taking than the rest of the world,” he explained.
He went on to say that, in general, “these are disenfranchised individuals at current financial institutions” and “often liquidate other assets to gain exposure… most of the time these are property or stocks.”
Another characteristic shared by this elusive and valuable group of investors is that they are often “non-crypto-natives,” meaning they are investors who created, or inherited, their wealth outside of the digital asset space. As such, they are “often overwhelmed by the asset class” and dealing with anti-money laundering requirements and fees specific to digital assets can prove a barrier to investing.
“They essentially don’t know where to start, it’s important to teach them how to navigate,” Bellingham said. “It’s important to have an ecosystem available to everyone and not limit it, especially for these newcomers.”
It also delved into the motivations and investment decisions that drive these so-called “non-crypto native” HNWIs to enter the market digital asset spacehow their trading behavior differs from that of their retail and institutional counterparts and their preferred investments.
BTC is the most popular coin among these investors, “the sound money play,” Bellingham said. In second place are the most popular on the market stablecoinsthat these new operators use as “dry powder” to enter the market.
He further noted that “BSV is very popular among HNWIs, they are not necessarily experts on the difference between BTC and BSV, but we are seeing a lot of interest.”
Having established who they are and what they are interested in, Bellingham outlined what the digital assets space can do to attract this valuable audience, some of whom were undoubtedly in attendance at LBC 2024.
The industry must adapt to its “unique service requirements,” including considerations of discretion, practical advice and compliance.
“They need transparent pricing, they want to be able to break down costs before they make a trade, they are passionate about self-custody and they want to do everything by the book, in full compliance with regulations,” Bellingham explained.
This last point, he suggested, is why they often choose companies like Coinify, based in jurisdictions with stringent regulatory requirements such as Denmark,” where the company is based.
However, Bellingham pointed out that there are often problems that arise from the various routes to market. For example, centralized exchanges may be useful for retail investors, but for HNWIs making large trades, they may not like the fee structure, coin custody and in general may not trust them, especially considering the bad press on exchanges like CoinBase (NASDAQ: MONEY) AND Binance.
This, Bellingham said, is once again where companies like Coinify come into play. Assist HNWIs by addressing their specific needs and concerns regarding “transparency” and “self-custody”.
Pathway issues aside, Bellingham said he is optimistic about this elusive investor class, noting that it’s surprising how quickly these “non-crypto-native” HNWIs feel comfortable making multiple trades in this space .
“When it comes to returning customers… we see that the majority come back for a second transaction.” This means, Bellingham suggests, that they haven’t finished building their portfolio after the first trade.
He concluded his speech by stating that the ultimate goal of Coinfy and the work it is doing to attract investors, such as native HNWIs of non-digital assets, is to “support the adoption” of blockchain technology, a goal that many of LBC delegates gathered will likely share.
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