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Why now? Current market conditions make this an interesting moment for digital assets: in August 2021, the total market value of cryptocurrencies rose above $2 trillion.
On the demand side, interest in cryptocurrencies from investors, initially from crypto enthusiasts, but increasingly also from retail clients – primarily millennials, high net worth individuals, family offices and institutions – keeps growing. This rise in demand is occurring despite significant volatility and significant technological and legal risks. These investors require new crypto exchange, trading and custody services that most banks and asset managers currently are not offering.
This report has been spurred by the enormous and growing interest in digital assets, and their increasing move towards the mainstream over the past year. To date, cryptocurrencies have had the highest profile in this space, but the digital asset category is in fact much broader.
To gauge industry attitudes toward cryptocurrencies, stablecoins, central bank digital currencies (CBDCs) and tokenised securities, as well as the rate of adoption of these digital assets, we have engaged with 25 leading financial services organisations with operations in EMEA. Our respondents were senior executives spanning a cross-section of established banks and wealth management firms, to consultancies and crypto startups from UK, Switzerland, Luxembourg, Germany, France, Spain, Portugal, Belgium and Ireland.
In our engagement with the market, we asked several questions with the intention of gaining a realistic perspective on financial services firms’ current adoption of digital assets; whether they are committing significant investment to it or at an experimentation stage, and to identify potential barriers to mainstream adoption. Will digital assets replace or be an alternative to fiat currency? Could the blockchain infrastructure underpinning it become a key part of banks and financial providers’ platforms?
The report breaks down the key findings into five sections:
- How do EMEA financial institutions view digital assets?
- Where will cryptocurrencies fit in the payments ecosystem?
- Is tokenisation nearing a tipping point?
- What role will regulation play in the digital assets space?
- How decentralised can finance get?
Digital assets and the underlying blockchain technology, no doubt, have the potential to transform EMEA financial services. The critical question is when. That is why it is so important to start taking the pulse of digital asset activity now.
Axel Wieandt, adjunct professor of finance at Kellogg School of Management, Northwestern University.