ADDX, a private market trading platform backed by Singaporean exchanges, will recognize bitcoin, ether, and USDC holdings of investors for granting “accredited investor” status to them.
Onboarding of BTC, ETH, USDC
However, it will apply a hefty 50% discount on bitcoin and ether and 10% on USDC to calculate their values for the net personal asset calculation of the investors. With this move, ADDX becomes the first financial institution in Singapore to offer accredited investor status based on cryptocurrency holdings, media reports said.
“As part of its process for verifying accredited investors, ADDX will begin recognizing three coins – Bitcoin, Ether, and USDC. The discount rates ADDX will apply when calculating the value of these crypto holdings is 50% for Bitcoin or Ether and 10% for USDC,” ADDX said in a PR.
Lately, Singapore has seen significant buzz around the digital assets ecosystem. On Monday, Jack Ma’s Ant Group announced the launch of a digital bank – ANEXT Bank — in the country that aims to serve small and medium enterprises.
About a week ago, Singapore’s central bank — the Monetary Authority of Singapore — launched Project Guardian, which aims to identify potential use cases of asset tokenization and decentralized finance (Defi), media reports said.
Digital Assets Are Here to Stay: ADDX CEO
“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,” said ADDX CEO Oi-Yee Choo.
Referring to a Gemini survey, the private capital market platform noted that crypto ownership rates have risen to over 80% worldwide in 2021. “Ownership rates have hit 30% in Singapore, 24% in Hong Kong, 20% in the US, 18% in the UK, and 17% in Germany,” it adds.
Risk Management Measures
“In line with regulations, ADDX will implement appropriate risk management measures that take into account the price volatility of crypto assets. For example, ADDX will recognise only cryptocurrencies with a higher market capitalisation and will apply a discount rate when valuing the assets,” the company said.
Singapore doesn’t recognize cryptocurrencies as income or financial assets, but it labels them as net personal assets. Taking price volatility into account, ADDX will employ appropriate risk management measures while using cryptocurrencies for the calculation of net personal assets to convince the regulators.
These assets and discount rates will be reviewed at regular intervals and may be revised as market conditions change, ADDX said in its PR.
Criteria for Accredited Investors
Under Singapore laws, investors need an “accredited investor” status to be able to invest in certain financial products. One of the three criteria for an individual to qualify as an accredited investor is over SGD 2 million (US$1.45 million) of net personal assets.
ADDX’s latest move is to recognize cryptocurrencies to calculate an individual investor’s net personal asset, which should be above SGD 2 million for accredited investor status. The other two criteria are a minimum income of S$300,000 ($217,991.57) in the last 12 months and S$2 million ($1.45 million) in net financial assets.