LHoFT Survey Reveals Cautious Optimism re Crypto-Assets

On Wednesday 9 February 2022, the Luxembourg House of Financial Technology (LHoFT) presented the findings of its first crypto-assets study aimed at assessing how Luxembourg’s asset management industry considers the potential opportunities and challenges of this new asset class.

The survey, conducted in the last quarter of 2021 in collaboration with PwC Luxembourg and with active support of the Association of the Luxembourg Fund Industry (ALFI), collected responses from 123 industry practitioners.

The findings of the first edition of the Crypto-Assets Management Survey in Luxembourg were revealed at an event at PwC Luxembourg’s Crystal Park.

The study found that customer demand and a desire to remain at the forefront of financial innovation were key incentives driving the development of crypto-asset products and services.

Nearly half (43%) of respondents expected crypto-assets to become a strategic priority within the next two years and a third expected to see broad adoption within the traditional asset management chain within five years.

The majority of respondents (61%) said they were already assessing, developing or providing crypto-asset products or services.

Every three in four respondents viewed diversification as the most attractive feature of crypto-assets from a portfolio management perspective, whilst 38% highlighted the asset class as a potential inflation hedge.

Most of respondents also expect custodianship, private banking and wealth management to see increasing exposure to crypto-assets over the coming five years.

Moreover, 89% of respondents believed that the Grand Duchy should take a more active stance in the crypto-assets space.

Nasir Zubairi, CEO of the LHoFT Foundation, said: "It is critical for the Asset Management Industry to get to grips with and stay on top of the world of crypto-assets. We hope the survey and study will help in providing a sense of the opportunities and challenges as well as the latest trends within this fast evolving sector".

Thomas Campione, CFA Director and Blockchain & Crypto-assets Leader at PwC Luxembourg, says: “While markets have been turbulent over the last two months, looking at the global picture and the industry structural developments, I expect 2022 to be a pivotal year for the crypto-assets management industry. It is critical that Luxembourg and the broad financial industry embrace the topic and do not stay away from the conversation because of contradictory signals”.

Overall, the survey results indicated a mix of enthusiasm and pragmatism around crypto-assets within Luxembourg’s financial services landscape.