The recent meltdown of the “JP Morgan Of crypto” FTX has created and existential crisis among the Digital Asset arena. This has undoubtably shed a gigantic spotlight on the attitude of the Digital Asset sector to compliance, risk, and general governance internally.
With the wreckage still being sifted through from regulators and investors alike the opportunity to uniquely position your business has never been greater. Although it is unfortunate that such basic business principles have created this opportunity to shed light on your risk management prowess, but such is the times.
Despite poor press, poor returns and general dubiousness of crypto and digital assets Fidelity Digital Assets reported that institutional interest has increased in the US by 42% and by a staggering 68% in Europe. Institutions in Asia appear to be ahead of the curve with 7 in 10 reporting an allocation to Digital Assets.
With tensions at an all-time high amongst the digital asset community you should absolutely expect the scrutiny from investors to be at an all-time high. They are going to focus on your risk and compliance function heavily as well as having an intense spotlight on the CFO in the business and rightly so given the current climate.
One of the largest obstacles to investing in Digital Assets would appear to be price volatility, 50% of investors surveys from Fidelity Digital Assets reported this as being the great obstacle. This loops back into how you effectively manage risk and how robust your compliance function is. 33% of those asked said that regulatory concerns were also an obstacle.
Compliance and risk will become much less of a back-office function moving into 2023 and all businesses should be catapulting their Chief Compliance, Finance and Risk officers into client pitches to demonstrate their ferocious efficiency moving forward and to win hearts and minds of how clients funds are housed and used and who has control over them once they land.
I have absolutely zero doubt that Digital Assets are here to stay and that we have only scratched the surface on the use cases and technology. No doubt an extremely tough year ahead but I and everyone at the firm remain positive and hesitantly bullish on the space flourishing once regulation comes into play at a government level and businesses have a more forward thinking thought process on risk, compliance, and governance.
All statistics given in this article are available in full from the Fidelity Digital Asset research section on their website under “Institutional investor Digital Assets Study”
By Connway Hunter – Head of Staffing – Digital Assets & Fintech -Please contact him: https://www.linkedin.com/in/recruitingmadesimple/