SINGAPORE - Private market digital exchange ADDX will recognise cryptocurrency holdings when assessing the assets of potential clients, it said on Wednesday (June 8).
The move is expected to help more individuals, including crypto investors, qualify for accredited investor status, thereby allowing them to participate in private market investments via ADDX.
Such investments include private equity and venture capital funds, hedge funds and pre-initial public offering companies, and are currently available only to accredited investors.
Under Singapore regulations, individuals need to have at least $300,000 of income from the past 12 months, $1 million in net financial assets or $2 million in net personal assets to qualify as accredited investors.
ADDX will accept crypto assets in the category of net personal assets.
As part of its process for verifying accredited investors, it will apply a 50 per cent discount rate for Bitcoin or Ether when calculating the value of these holdings, and a 10 per cent discount for the USDC stablecoin.
The three coins and their discount rates will be reviewed at regular intervals and may be revised as market conditions change.
To qualify as accredited investors on ADDX, individuals must show that the value of their net personal assets meets the $2 million threshold after the inclusion of crypto assets with the discount rate applied.
Given that a growing number of investors now hold crypto, it is reasonable for these assets to be recognised as part of one’s portfolio, said ADDX chief executive Choo Oi-Yee.
The exchange expects to register a significant number of investors - particularly younger ones - as a result of this change.
“Crypto investors tend to be younger, which means they are less likely to have accumulated wealth in traditional assets, simply because they have been working for a shorter time,” Ms Choo said.
“This new change may well be important for them to cross the $2 million line into becoming an accredited investor.”
The developments underscore a growing acceptance of crypto as an emerging asset class and come at a time when the authorities are channeling more resources to monitor and regulate the space.
According to a global survey by Gemini, crypto ownership rose by more than 80 per cent in 2021. Ownership rates have hit 30 per cent in Singapore. After halving from its peak in November 2021, the overall crypto market is still valued at US$1.2 trillion (S$1.65 trillion).
“Cryptocurrencies are here to stay. They no longer exist only on the fringes of wealth and investment conversations,” said Ms Choo.
“In time to come, we are likely to enable customers to fund their investment wallets with cryptocurrencies and to convert their assets between fiat currencies and crypto,” she added.
