Trading platform ADDX begin accepting crypto assets, the first in Singapore to do so

• The private market exchange became the first financial institution in Singapore to recognise cryptocurrency assets for the purposes of onboarding accredited investors. 
• The move opens the way for more individuals to qualify for accredited investor status.
• ADDX will implement appropriate risk management measures that take into account the price volatility of crypto assets.

Singapore has long had the ambitions to become a global cryptocurrency hub — a goal that has not slowed authorities in grappling with and addressing the multitude of risks the fast-growing sector presents. The upside is that the crypto sector in the city-state has nevertheless been booming. Now, adding on to the growth would be a privately trading platform, ADDX, who just announced that it has just become the first financial institution in Singapore to recognise crypto assets for the purposes of onboarding accredited investors. 

The move inevitably underscores the growing acceptance of digital currencies among financial services firms in Singapore, as they seek to tap a wide array of investors. In a statement to the press, ADDX emphasized that its step in accepting crypto assets in Singapore opens the way for more individuals to qualify for accredited investor status. 

“They can thereby participate in more sophisticated investment opportunities in the private markets, which tend to be more resilient in times of market volatility. These include asset classes such as private equity and venture capital funds, hedge funds and pre-IPO companies.,” it added.

The move by ADDX is also a part of its mission of democratizing private market investing, and by recognising crypto holdings helps them to serve a much wider segment of investors – not just investors with traditional holdings, but those who hold crypto as well. ADDX CEO Oi-Yee Choo shared that at a time when the markets are volatile, this move is also designed to enable crypto investors to diversify into the regulated private markets, which tend to be more stable across different phases of market cycles.

How will ADDX align with the crypto rules in Singapore?

In line with regulations, ADDX said it will implement appropriate risk management measures that take into account the price volatility of crypto assets. That simply means ADDX will recognise only cryptocurrencies with a higher market capitalisation and will apply a discount rate when valuing the assets. 

For context, under Singapore’s regulatory regime, individuals have to meet any one of three criteria in order to qualify as accredited investors: their income in the past twelve months exceeds SGD 300,000, or their net financial assets exceed SGD 1 million, or their net personal assets exceed SGD 2 million. Although crypto assets are not currently recognised as income or financial assets in Singapore, they can however be recognised under the third category of net personal assets.

ADDX will begin recognizing three coins for its process in verifying accredited investors,  – 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. “These coins and discount rates will be reviewed at regular intervals and may be revised as market conditions change,” ADDX said.

Additionally, to qualify as accredited investors, individuals would have to provide documents to show that the value of their net personal assets meets the SGD 2 million threshold after the inclusion of crypto assets with the discount rate applied. ADDX’s move also aligns with the global movement towards crypto whereby ownership rates are at record levels worldwide. 

In fact, according to a global survey by Gemini, crypto ownership rose by more than 80% 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. Choo also reckons that 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 recognised 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.”

ADDX, also Asia’s largest private market exchange, listed their first fund with exposure to crypto last year and the progress this week forms part of a more strategic and comprehensive crypto roadmap for them.

“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,” Choo concluded.

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